PRESENTED BY

Guidance for the

Application and

Conversion

Capabilities of

XBRL

Foreword

Dear Financial Executive,

We are on the threshold of a revolution in corporate reporting.

That is how SEC Chairman Christopher Cox describes the use of interactive data to improveinternal and external financial reporting.

One important tool for interactive data is eXtensible Business Reporting Language (XBRL). Iknow something about XBRL because I helped implement it at Microsoft. We were the first U.S.company to submit our annual report in XBRL.

This reference guide is intended to give you some background on XBRL, and has been preparedto show you how you can implement XBRL in your company. It includes the following docu-ments:

• An SEC transcript of Chairman Cox’s remarks at the 12th XBRL International Confer-ence;

• The SEC’s final rule on XBRL, dated February 3, 2005, “XBRL Financial ReportingProgram on the EDGAR System”;

• “Financial Reporting in the XBRL Age: A Step-by-Step XBRL Implementation,” a FERFExecutive Report that I co-authored;

• “EDGAR Online Provides New Investment Analysis Capabilities with XBRL-TaggedData,” a Gartner white paper dated December 1, 2005; and

• “A ‘Revolution’ in Corporate Reporting?” from the January/February issue of FinancialExecutive magazine.

This reference guide will provide you with all that you need to get started.

Best wishes,

Taylor HawesController, Global Platforms and OperationsMicrosoft Corporation

ChairmanFEI’s Committee on Finance and Information Technology (CFIT)

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Table of Contents

1. SEC TRANSCRIPT OF CHAIRMAN COX’S REMARKS AT THE 12TH XBRLINTERNATIONAL CONFERENCE 1

2. SEC FINAL RULES ON XBRL 4

I. BACKGROUND 5

II. THE AMENDMENTS 6

A. Form of XBRL Submissions 6

B. Description of XBRL Data 6

C. Timing of XBRL Submissions 7

D. Official Filings Still Required 8

E. Voluntary Program Content and Format 8

F. XBRL Data Must Correlate to Standard XBRL Taxonomies 11

G. Use of Tagged Data 12

H. Liability Issues 13

III. PAPERWORK REDUCTION ACT 14

IV. COST-BENEFIT ANALYSIS 16

A. Benefits 16

B. Costs 18

V. FINAL REGULATORY FLEXIBILITY ANALYSIS 19

A. Reasons for, and Objectives of, the Amendments 19

B. Significant Issues Raised by Public Comment 19

C. Small Entities Subject to the Amendments 20

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements 20

E. Agency Action to Minimize Effect on Small Entities 21

VI. CONSIDERATION OF IMPACT ON THE ECONOMY, BURDEN ONCOMPETITION AND PROMOTION OF EFFICIENCY, COMPETITION,AND CAPITAL FORMATION 21

VII. STATUTORY BASIS AND TEXT OF AMENDMENTS 22

VIII. EXHIBITS 23

3. SEC PRESS RELEASE OFFERING INCENTIVES FOR COMPANIES TO FILEFINANCIAL REPORTS WITH INTERACTIVE DATA 44

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Table of Contents

4. SEC PRESS RELEASE EXTENDING THE DEADLINE FOR COMPANIES TO JOININTERACTIVE DATA TEST GROUP 45

5. OCTOBER 2005 FERF EXECUTIVE REPORT: FINANCIAL REPORTING IN THEXBRL AGE: A STEP-BY-STEP XBRL IMPLEMENTATION 46

I. PURPOSE AND INTRODUCTION 47

II. XBRL’S ADOPTION EVOLUTION 48

III. EXTERNAL REPORTING AND XBRL 48

IV. Internal Reporting and XBRL 51

V. Taking XBRL to the Next Level 53

VI. What’s in a Number? The Specifics of XBRL 53A. An XBRL Item 54B. XBRL Financial Reporting Taxonomies Architecture 55

VII. An XBRL Implementation; Step-by-Step Project Plan 57A. Step 1-Identify a Team: Accountant and XML Developer 58B. Step 2-Assess Scope of Reporting and Determine Taxonomy 58C. Step 3-Compare and Map 10-K/10-Q to Taxonomies 59D. Step 4-Extend the Taxonomy as Necessary 60E. Step 5-Create an Instance Document and Validate Calculations 60F. Step 6-Review and Validate Instance Document 61G. Step 7-Publish the Instance Documents and Taxonomy 62

VIII. Conclusion 63

IX. About the Authors, CFIT and FERF 64

6. DECEMBER 2005 GARTNER WHITE PAPER 66

7. A ‘REVOLUTION’ IN CORPORATE REPORTING 75

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Speech by SEC Chairman:Remarks at the 12th XBRL International Conference

by

Chairman Christopher Cox

U.S. Securities and Exchange Commission

Tokyo, JapanNovember 7, 2005

Good afternoon. This is an exciting conference about some exciting opportunities. We really areon the threshold of a “Revolution in Corporate Reporting,” which is, appropriately, the title ofthis program.

In my tenure as Chairman of the Securities and Exchange Commission, I intend to bring oursystem of corporate disclosure and financial reporting into the 21st century. And while I musttell you that the views I express here are my own, and do not necessarily represent those of theCommission or its staff, you should know that every appointment I make as Chairman will beconsistent with this vision of tapping the possibilities of interactive data.

Interactive data promises more than simply a revolution in corporate reporting. For the SEC aswell as for financial regulatory agencies around the world, corporate reporting is not an end initself, but a means to achieving our missions. Those missions include protecting investors,encouraging capital formation, and promoting healthy markets.

Every one of those missions will be better achieved with the widespread adoption and use ofinteractive data. Interactive data will also make disclosures more useful to investors, and to everymarket participant. The information contained in SEC reports could be made instantly search-able by analysts and investors alike. Because not just the disclosure documents, but the datawithin them will be searchable and retrievable, interactive data will dramatically improve theusefulness of the entire disclosure exercise.

In our capital markets, better information usually makes for better choices. It can also help topromote honesty and integrity. As Justice Brandeis opined many years ago, “sunlight is the bestdisinfectant.” He made that statement in an influential book credited for inspiring the creationof the Securities and Exchange Commission.

Interactive data could make it possible for issuers to reduce the cost of substantiating the num-bers that appear in their financial statements. It would assist regulators in maintaining theintegrity of the markets. In the academic realm of economics, scholars often assume the ideal of“perfect information” in an effort to explain the workings of a well-functioning market. Inter-active data will help us take a giant step toward realizing that ideal. Interactive data promises yetanother revolution in the field of international accounting standards.

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The global debates over the “right” way to do accounting might never be settled. We may neverhave a global accounting Esperanto. But if the development of taxonomies for data tagging pro-gresses sufficiently, some day in the future it may well be possible for the users of financialinformation to render it according to any accounting regime they choose: US GAAP, IFRS, orany other system.

Instead of being forced to resolve genuinely difficult financial issues on a Procrustean bed ofarbitrary rules which don’t suit the user’s analytical purpose, accountants, analysts and investorsaround the world could all view that information from multiple perspectives.

At the SEC, our assessment of interactive data began in July of last year. But the Commission’sinterest in using technology in our disclosure program has a much longer history. The EDGARsystem, our core technology, was originally designed in the late 80s. Over time, the EDGARsystem has become out of date. It’s essentially the same now as it was a decade ago.

It goes without saying that there have been tremendous advances in computer technology andelectronic communications since EDGAR was born. During the time that EDGAR has stood still,a single 3 minute recording of music that used to require a cassette or a compact discs has beenshrunk to near invisibility, so that today literally thousands of songs can fit on a device the sizeof a credit card.

When EDGAR was born, the way most people searched the news was to manually go throughhuge stacks of newspapers and magazines. Today, almost anyone at home or in any publiclibrary can not only search the entire planet for news that is seconds old, but also have the newsrobotically sorted for them in real time via the Internet, based on their specific interests.

In the EDGAR era, business correspondence was delivered by mail which took days to arrive —or, if it was truly important, it came by overnight express. That same urgent correspondencetoday can be transmitted instantly to any country on earth, at virtually zero marginal cost, froma handheld device.

Technology is fueling a radical change in the way that business and individuals receive, process,and interact with data. It’s high time that the SEC’s financial reporting caught up with theinformation revolution. Indeed, my hope is that together we can all help lead a new revolution.In the global business environment of the 21st century, people and firms need to communicate24/7. They need to find seamless ways to accommodate different reporting systems, differentlanguages, and different regulatory environments. Not just businesses and regulators, but invest-ors, too, want faster access to more and better information than ever before.

At the SEC, our XBRL Voluntary Program was launched earlier this year as a tentative first step.The program was designed to encourage all of the participants to help us assess the potential forusing interactive data both within and outside the Commission.

For our registrants, it’s an opportunity to explore the costs and benefits of using interactive data.They’re helping us understand the impact of using XBRL on their financial reporting systems,

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and on their internal financial controls and processes. We’re also learning how XBRL can helpcompanies communicate with their shareholders and the markets generally.

In the months ahead, I expect that investors and analysts will continue to pilot the use of inter-active data applications. That will help us assess how this new flexible format might help themto improve their own analyses and decisions.

For software providers and other technology providers, this is an opportunity to showcase thecapabilities of XBRL and interactive data and tangibly demonstrate the impact to the afore-mentioned parties. For the SEC, this is our opportunity to assess how the use of interactive datacan help us improve our internal review of information, and how it can help us make it availablein more useful form to the public.

It’s fitting that this 12th XBRL International Conference is taking place in Japan. After all,XBRL has already received significant support from the Japanese government. In fact, as manyof you know, the Bank of Japan plans to implement a voluntary XBRL filing program for over500 regulated entities, possibly as early as next January. In addition, the counterpart of the SECin Japan — the Financial Services Agency — has already formed a committee to accelerate theuse of XBRL in financial disclosure. The FSA anticipates introducing an XBRL-based filing sys-tem for financial statements in the near future. The SEC and the FSA have a bilateral Memo-randum of Understanding that permits us to partner on issues such as this, and so I expect thatJapan’s experiences using XBRL will form an important part of our dialogue in the monthsahead.

As we progress with the SEC’s own assessment of interactive data, we will continue to workclosely with all of you. Because of the leadership that you’ve shown over the past 5 years, wenow stand on the threshold of some truly breathtaking changes in our global financial markets.

I’d especially like to thank those of you who have provided feedback to the Commission duringour Voluntary Program. We need your continued support. Going forward, the single most sig-nificant way you can help is to participate in the XBRL filing program at the SEC. Keep in mindthat the program isn’t limited to registrants that file reports with the SEC. We are anxious toreceive XBRL documents of any kind, both for our own internal assessment, and for publicationto the market at large via our website. And keep providing us with feedback on your experi-ences. The comments we receive will be instrumental in determining the next steps in ourimplementation of XBRL disclosure.

So let us know what’s working for you, and where change is required. If you haven’t seen it, thelatest opportunity for your feedback is in the form of a Request for Information that the SECissued last month. We’re looking for specific information on XBRL-enabled software, and we’dvery much appreciate your views.

Above all, continue with your enthusiastic contributions to the global development of the XBRLstandard. Have no doubt — you are changing the world ... for the better.

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SEC FINAL RULES ON XBRL

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 228, 229, 232, 240, 249 and 270

Release Nos. 33-8529, 34-51129, 35-27944, 39-2432, IC-26747; File Number S7-35-04

RIN 3235-AJ32

XBRL Voluntary Financial Reporting Program on the EDGAR System

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

SUMMARY: We are adopting rule amendments to enable registrants to submit voluntarily sup-plemental tagged financial information using the eXtensible Business Reporting Language(XBRL) format as exhibits to specified EDGAR filings under the Securities Exchange Act of1934 and the Investment Company Act of 1940. Registrants choosing to participate in thevoluntary program also will continue to file their financial information in HTML or ASCIIformat, as currently required. To participate in the program, volunteers need to submit theirXBRL formatted information in accordance with the amendments. The voluntary program isintended to help us evaluate the usefulness of data tagging and XBRL to registrants, investors,the Commission and the marketplace.

EFFECTIVE DATE: March 16, 2005.

FOR FURTHER INFORMATION CONTACT: If you have questions about the amendments,please contact one of the following members of our staff: Brigitte Lippmann or Mark W. Green,Division of Corporation Finance (202-942-2910), Jeffrey W. Naumann, Office of the ChiefAccountant (202-942-4400), or Toai P. Cheng (202-942-0590) or David S. Schwartz(202-942-0721), Division of Investment Management, Securities and Exchange Commission,450 Fifth Street, NW, Washington, DC 20549. If you have technical questions about theEDGAR system, please contact the EDGAR Filer Support Office (202-942-8900) or RichardHeroux, EDGAR Program Manager (202-942-8800), in the Office of Information Technology.

We also invite public inquiries and comments regarding the voluntary program through the useof an Internet electronic mailbox at http://www.sec.gov/spotlight/xbrl.htm. Because electronicmail (e-mail) on the Internet is not secure, you should not send confidential or sensitiveinformation.

SUPPLEMENTARY INFORMATION: We are adopting1 amendments that will add Rules 4012

and 4023 to Regulation S-T, revise Rules 114 and 3055 under Regulation S-T,6 Item 6017 underRegulation S-K,8 Item 6019 under Regulation S-B,10 Rules 13a-1411 and 15d-1412 under the Secu-rities Exchange Act of 1934 (“Exchange Act”)13 and Rules 8b-1,14 8b-215 and 30a-216 under theInvestment Company Act of 1940 (“Investment Company Act”).17 We also are adoptingamendments that revise Forms 20-F18 and 6-K19 under the Exchange Act and add new Rule8b-33 under the Investment Company Act.

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I. BACKGROUND

On September 27, 2004, we proposed to adopt amendments to Regulation S-T to allow regis-trants to supplement their Commission filings by furnishing financial data on the Commission’sElectronic Data Gathering, Analysis and Retrieval System (“EDGAR”) as an exhibit usingeXtensible Business Reporting Language (“XBRL”),20 beginning with the 2004 calendaryear-end reporting season.

All registrants who file with the Commission are generally required to file electronically onEDGAR.21 The EDGAR database, accessible on our Web site at http://www.sec.gov, providesready access to a broad range of registrant information. Electronic submissions are governed byRegulation S-T, in conjunction with the EDGAR Filer Manual22 and the electronic filing provi-sions of applicable rules, regulations, and forms. Since we first adopted rules to implement theoperational phase of EDGAR, we have continually sought to make EDGAR more useful to theinvesting public. Proponents of the XBRL reporting standard assert that it offers benefits for allparticipants in the financial information supply chain, from registrants, who would benefit frompotential efficiencies in preparing their filings, and improved transparency of their filings, result-ing in broader analyst coverage, more market exposure and greater investor confidence, to regu-lators and investors, who would benefit from ready access to tagged financial data for analyticaland review purposes.23

The amendments that we adopt today will permit volunteers to submit on EDGAR supplementalexhibits using XBRL for the purpose of allowing registrants, the Commission and others to testand evaluate tagging technology. The voluntary program will permit any registrant to participatemerely by submitting an XBRL exhibit in the required manner. The XBRL exhibits will be pub-licly available but will be considered furnished rather than filed. Although XBRL exhibits will berequired to accurately reflect the information that appears in the corresponding part of the offi-cial filing, the purpose of submitting XBRL data is to test the related format and technology and,as a result, investors and others should continue to rely only on the official version of a filingand not rely on the XBRL data in making investment decisions. We will include cautionarylanguage to this effect on the Commission’s Web site.

We received 28 comment letters relating to the Proposing Release from various constituencies,including issuers, accounting firms, financial analysts, filing agents and associations representingthe interests of such constituencies.24 Commenters expressed general overall support for theCommission’s approach to implementing the voluntary program and investigating tagged data.Commenters also supported our approach of not limiting the program by size or specificindustry.25 The final rules include a number of changes from the proposed rules to address thecomment letters, including commenters’ recommendations to encourage participation in theprogram and provide volunteers with greater flexibility. For example, we have addressed com-menters’ requests to allow volunteers the option of whether to submit the notes to the financialstatements in XBRL in the voluntary program.26 There were many additional comments address-ing the development of the voluntary program and the XBRL technology, including taxonomydevelopment, auditor attestation and audit opinions. We discuss specific comments where appli-

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cable in this release; otherwise we may consider these comments in the future based on our expe-rience with the voluntary program.

We emphasize that we are in the preliminary phases of testing XBRL and we may amend thevoluntary program as the technology becomes more mature and based on our experience withthe program.

II. THE AMENDMENTS

In conjunction with establishing the voluntary filing program, we are adding new Rule 401 toRegulation S-T that will allow filers, on a voluntary basis, to furnish supplemental financialinformation using XBRL. The revision to Rule 11 of Regulation S-T, adopted as proposed,makes “XBRL-Related Documents” a defined term that means documents related to presentingfinancial information in XBRL format that are part of a voluntary submission in electronicformat in accordance with new Rule 401. New Rule 401 generally provides that a registrantparticipating in the voluntary program (a “volunteer”) may submit XBRL-Related Documents inelectronic format if they meet all the conditions of the rule. Appendix L to the EDGARLink FilerManual will provide instructions and guidance on the preparation, submission, and validation ofEDGAR-acceptable electronic filings with attached XBRL-Related Documents.27 The EDGARsystem upgrade to Release 8.10 is scheduled to become available on February 7, 2005 to, amongother things, enable EDGAR to process XBRL-Related Documents when the voluntary programbecomes effective on March 16, 2005.28

A. Form of XBRL Submissions

The amendments require that volunteers furnish XBRL-Related Documents as an exhibit toeither the Exchange Act or Investment Company Act filing from which they were derived, or asan exhibit to a filing on Form 8-K29 or Form 6-K,30 as applicable, that references, and is sub-mitted no earlier than, the related filing.31 The Forms 8-K and 6-K alternative does not apply tovolunteers that are registered management investment companies because they are generally noteligible to file those forms.32 XBRL-Related Documents will be identifiable as Exhibit 100 to thecorresponding filing.

B. Description of XBRL Data

Rule 401, as adopted, contains three requirements for disclosure that must appear in the filingwith which the XBRL-Related Documents are submitted. These requirements were not includedin the rule as proposed. First, Rule 401 requires volunteers to describe the XBRL-RelatedDocuments (whether they are filed as an exhibit to the related official filing or to a Form 8-K orForm 6-K that references such filing) either as “unaudited” or, for quarterly financial statements,“unreviewed.” Second, Rule 401 requires volunteers to provide cautionary language advisinginvestors that the purpose of furnishing XBRL data is to test the format and the technology and,as a result, investors should not rely on the XBRL data in making investment decisions. This

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additional disclosure will complement the similar cautionary statements we plan to add to ourWeb site as described in the Proposing Release. Finally, Rule 401 provides that, if a reason to filea Form 8-K or Form 6-K or an amendment to a Form 8-K or Form 6-K is to submit as an exhibitXBRL-Related Documents that present information related to financial information filed as partof a different filing (e.g., a Form 8-K that references a previously filed Form 10-Q33), volunteersmust reference the official filing from which the data in the XBRL-Related Documents wasderived.34 These disclosures should be provided, as applicable, in:

• the exhibit index of the Forms 10-K,35 10-Q, 10,36 10-SB,37 10-KSB,38 10-QSB39 or 20-F,

• Item 2.02 or 8.01 of Form 8-K, or

• the body of the Forms 6-K, N-CSR40 or N-Q.41

We received several comments and recommendations regarding disclosure about furnishingXBRL data.42 One commenter agreed that it is reasonable to require registrants to describe theofficial filings to which the XBRL exhibits correspond because investors may not be aware thatExhibit 100 reflects XBRL data.43 Another commenter44 recommended that volunteers submit aletter describing management’s basic decisions involving the use of taxonomies and policiesabout creating instance documents, including the correlation to printed financial statements andother relevant resources, the selection of taxonomies, additions and adjustments to the basetaxonomy or taxonomies, and the level of tagging detail.45 Another commenter believed thatvolunteers should be encouraged to disclose:

• that the financial information in the XBRL-Related Documents is appropriately tagged,

• the source of the tagged information (e.g., the financial statements, MD&A),

• the extent of tagging used, including whether there have been any changes in the extent oftagging or the use of extensions as compared to XBRL-Related Documents furnished forprevious fiscal periods, and

• whether any extensions meet the XBRL International technical specification.46

To facilitate participation, we have decided not to require such disclosure for the voluntaryprogram; however, we encourage volunteers to provide the additional disclosure recommendedby the commenters.

C. Timing of XBRL Submissions

The XBRL-Related Documents may be submitted at the same time as the official EDGAR filingto which they relate, either as an exhibit to the official filing or, for operating companies, as anexhibit to a Form 8-K or Form 6-K47 filed simultaneously. Alternatively, the XBRL-RelatedDocuments may be filed subsequent to the official EDGAR filing to which they relate, either in alater amendment to the official filing or, for operating companies, as an exhibit on Form 8-K or

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Form 6-K. Volunteers will not be permitted to submit the XBRL-Related Documents before theyfile the related official document. Although the amendments do not establish a deadline forsubmitting or amending XBRL data, volunteers are encouraged to submit the XBRL-RelatedDocuments with the official document or shortly after the official document is filed. Volunteerswill be free to submit their XBRL exhibits regularly or from time to time and can stop or start asthey choose. If a volunteer amends the XBRL-Related Documents it submitted earlier, it shouldamend the filing to which the XBRL-Related Documents are attached as an exhibit.48

Many commenters asserted that allowing volunteers to submit their XBRL-tagged financial state-ments after they file the related official filing will be important to securing volunteers.49 Com-menters recommended that a reasonable period of time be allowed for submitting XBRL-RelatedDocuments and suggested periods typically ranging from 30 days up to 90 days.50 One com-menter recommended that no deadline be required.51 Other commenters approved of a delay, butdid not specify a time period.52

As proposed, we have not implemented a submission deadline for furnishing XBRL data. One ofthe reasons for this decision is that volunteers may wish to furnish XBRL-Related Documentsthat relate to historical financial information from their previous Commission filings. While itwould be preferable for registrants to submit all XBRL-Related Documents promptly, data ele-ments in the submission would include date information and the voluntary program includessafeguards against reliance on the data. In addition, we recognize that registrants may be dis-couraged from participating in the voluntary program if we impose deadlines, especially duringthe early stages of the program when volunteers are testing the technology.

Some commenters recommended that rather than amend submissions, the volunteers be allowedto “withdraw” them from EDGAR.53 However, submissions to EDGAR cannot, as a practicalmatter, be withdrawn after public dissemination.

D. Official Filings Still Required

The XBRL-Related Documents submitted in the voluntary program will be supplemental sub-missions and will not replace the required HTML or ASCII version of the financial informationthey contain. Volunteers will be required to continue to file their official EDGAR filings.

E. Voluntary Program Content and Format

XBRL-Related Documents must contain only voluntary program content (“Voluntary ProgramContent”) that appears in voluntary program format (“Voluntary Program Format”) as furtherdescribed below.

Voluntary Program Content must consist of mandatory content (“Mandatory Content”) andmay be accompanied by optional content (“Optional Content”).

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Mandatory Content consists of a complete set of information for all periods presented in thecorresponding official EDGAR filing from one or more of the following categories (as filed in thecorresponding official EDGAR filing):54

• the complete set of financial statements (the only exceptions are that notes to the financialstatements and schedules related to the financial statements may be omitted55 unless thevolunteer is a registered management investment company, in which case it must includeSchedule I – Investments in Securities of Unaffiliated Issuers);56

• earnings information set forth in Form 6-K or Items 2.02 or 8.01 of Form 8-K (whethercontained in the body of the Form 8-K or Form 6-K or in an exhibit, and whether filed orfurnished); or

• financial highlights or condensed financial information57 (if the volunteer is a registeredmanagement investment company).

Optional Content can consist only of a complete set of information that is:

• for all periods presented in the corresponding official EDGAR filing;

• related to financial information in the corresponding official EDGAR filing that issimultaneously submitted as Mandatory Content; and

• from one or more of the following categories (as filed in the corresponding officialEDGAR filing):58

• audit opinions;59

• interim review reports;60

• reports of management on the financial statements;

• certifications; or

• Management’s Discussion and Analysis of Financial Condition and Results of Oper-ations (“MD&A”),61 Management’s Discussion and Analysis or Plan of Operation,62

Operating and Financial Review and Prospects63 or Management’s Discussion ofFund Performance (“MDFP”).64

Voluntary Program Content is in Voluntary Program Format if:

• each data element (i.e., all text and all line item names and associated values, dates andother labels) contained in the XBRL-Related Documents reflects the same information inthe corresponding official EDGAR filing (i.e., the HTML or ASCII version);

• no data element in the corresponding official EDGAR filing is changed, deleted or sum-marized in the XBRL-Related Documents;

• the XBRL-Related Documents correlate to the appropriate version of a standard taxon-omy, supplemented with extension taxonomies as specified in the EDGAR Filer Manual;

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• each data element contained in the XBRL-Related Documents is matched with the appro-priate tag in accordance with any applicable taxonomy; and

• the XBRL-Related Documents contain any additional mark-up related content (e.g., theXBRL tags themselves, identification of the core XML documents used and othertechnology related content) not found in the corresponding official EDGAR filing that arenecessary to comply with the EDGAR Filer Manual requirements.

We had proposed to require volunteers to furnish in XBRL format a complete set of financialstatements, including notes to the financial statements. This approach would have provided acomprehensive test of the capacity of the XBRL format for financial information to replicate theHTML and ASCII versions. The proposal also asked for comment on whether volunteers shouldbe permitted to omit the notes to the financial statements. Many commenters disagreed with theproposal to require a complete set of the notes to the financial statements in XBRL format.65

Several commenters expressed the view that the taxonomy development of the notes to thefinancial statements is not detailed enough in the standard taxonomies to facilitate easytagging.66 As a result, commenters generally believed that volunteers would need to create sub-stantial extensions, which would be burdensome and could discourage registrants from partic-ipating in the program.67 Several commenters recommended allowing volunteers to submitfinancial statements in XBRL format that omit the notes to the financial statements.68 Othercommenters indicated that the notes to the financial statements should be included in XBRLformat, noting, however, that the Commission could limit the notes required to be tagged orallow the use of a single tag for all notes.69 Some commenters recommended that volunteers beafforded flexibility in determining the level of detail to which the notes to the financial state-ments are tagged.70

Although we consider the notes to the financial statements to be an integral part of the financialstatements for filing purposes, we have determined not to mandate them for purposes of thevoluntary program. Recognizing the technical issues presented by tagging the notes to the finan-cial statements, and in light of the other safeguards in the rules, we are providing volunteers withadditional flexibility to determine whether or not to include the notes to the financial statements.If volunteers do choose to tag the notes to the financial statements in their XBRL-RelatedDocuments, they must tag all the notes so that they meet the requirements of Voluntary ProgramContent. Representing the entire set of notes to the financial statements with a single tag doesnot appear to be useful to users because of the difficulty of consuming such a large volume ofdata in that format. Consequently, we encourage volunteers that choose to tag the notes to thefinancial statements to tag at a level that provides practical data to users and furthers the goal oftesting the capabilities of the XBRL technology.

As proposed, investment company volunteers would have been required to submit the schedulesrelated to the financial statements when submitting the financial statements in XBRL format.One commenter voiced the concern that, because the XBRL taxonomy for investment companiesmay not be sufficiently developed to support tagging of these schedules, requiring inclusion ofthe related schedules would force investment company volunteers to create a substantial set oftaxonomy extensions, which would discourage participation in the program.71 We generally

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agree and have modified the rules to limit the related schedules that registered managementinvestment company volunteers must submit in XBRL format with the financial statements toSchedule I – Investments in Securities of Unaffiliated Issuers.72 We believe that this schedulemust be provided in XBRL format because the information is critical to an understanding ofinvestment company financial statements and to testing the XBRL program with regard toinvestment company filings.

Some commenters requested clarification of the requirement to provide XBRL data containingthe “same information” as in the official filing to which it relates.73 In response to these com-ments, as discussed above, we have revised proposed Rule 401 to provide more detailedspecification of the various respects in which the information in the XBRL-Related Documentsmust be the “same” as that in the official filing to which it relates. We have explained that noinformation in the corresponding official filing may be deleted, changed or summarized in theXBRL format. For example, if the revenue line item in the related official filing’s income state-ment is broken down into different segments, the XBRL data must also contain the revenue lineitems for each segment; the volunteer cannot only include the total revenue line item. If a volun-teer submits MD&A or MDFP in XBRL format, all text in addition to the tables and schedulesmust be tagged. We did not take the approach suggested by some commenters to require that theXBRL data be “consistent with”74 or “materially the same”75 as the official filing because webelieve that this could cause uncertainty, reduce the disclosure provided in an XBRL format, andimpair our pursuit of the objectives of the voluntary program.

One commenter recommended that the voluntary program exclude XBRL tagging of earningsreleases, selected financial data and schedules of ratio of earnings to fixed charges because thereare no clear standards regarding the content and presentation of such information.76 This com-menter also was concerned that some volunteers may interpret the proposed rule to allow XBRL-Related Documents to contain partial financial presentations so long as the elements of such apresentation are “the same information” as presented in (i.e., consistent with) the complete set ofannual or interim financial statements or in MD&A. As noted above, we have clarified thatpartial financial presentations are not permissible content for XBRL submissions. Also, in viewof the goals of the voluntary program to test and evaluate data tagging, we would like to test awide variety of XBRL data. Therefore, volunteers will be able to present, among otherinformation, earnings information, MD&A, MDFP, financial highlights, management oraccounting reports and certifications77 in XBRL format.

F. XBRL Data Must Correlate to Standard XBRL Taxonomies

The voluntary program requires all volunteers to use the appropriate version of a standard taxon-omy, supplemented with extension taxonomies as specified by the EDGAR Filer Manual. TheXBRL Consortium has publicly announced that it will finalize the following standard taxono-mies, which have all completed at least one review and comment period, by the end of the firstquarter of 2005:78

• Commercial and Industrial;79

• Banking and Savings Institutions;

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• Insurance; and

• Investment Companies.80

We have chosen March 16, 2005 as the effective date for the program, since this is the date bywhich accelerated filers with December 31 fiscal year ends are required to file their Form 10-Ks.We will provide notice on our Web site of the taxonomies supported for the voluntary programand expect that additional standard taxonomies will be permitted on the EDGAR system as theyare finalized.81 The final standard taxonomies will be incorporated into the EDGAR system andvolunteers may not attach the standard taxonomies to filings made on EDGAR.

Commenters generally believed that the draft U.S. GAAP taxonomies are sufficiently developedfor use in the voluntary program, but acknowledged that most volunteers will need to createextensions to meet their reporting requirements.82 Some commenters believed there are sufficientsoftware tools available in the market to create such extensions, but noted that the softwarerequires further development for satisfactory end-user implementation.83 One commenter, whilestrongly supporting the voluntary program, recommended that the XBRL specification for thestandard taxonomies be changed to eliminate the required use of what the commenter describedas its complex proprietary structure.84 This commenter believed that the full XBRL specificationwill not be useful to financial analysts because the customized extensions must be analyzed todetermine comparability among companies. We expect that the voluntary program will enable usto better analyze the adequacy of the standard taxonomies and whether it would be desirable todevelop our own taxonomy for some or all regulatory reporting requirements.85

G. Use of Tagged Data

As discussed in the Proposing Release, we had considered developing an application, such as astandard style sheet, so that users would be able to view XBRL data in a human readable formaton our Web site. This application would have converted XBRL files into a document that wouldhave the appearance of traditional financial information, such as a balance sheet or incomestatement.

Commenters generally did not support a standard style sheet.86 Some commenters believed that astandard style sheet was not feasible because it would not be able to render extensions.87 A stylesheet that could not render extensions would not display all the information tagged from thecorresponding official EDGAR filing.

We have decided to commence the voluntary program without providing a style sheet or otherrendering application on our Web site. Users of EDGAR data on http://www.sec.gov will be ableto download the XBRL data to perform their own financial analysis if they have appropriatesoftware.88 We plan to continue to analyze rendering and other capabilities and we may addthese features in the future. Users will continue to be able to view the official filing in ASCII orHTML format, as they can today.

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H. Liability Issues

Because the voluntary program is experimental, contains other appropriate safeguards, andshould not unnecessarily deter volunteers from participating, the revised rules provide limitedprotections from liability under the federal securities laws. Commenters generally supported theproposed liability protections;89 however, several commenters requested clarification as furtherdiscussed below. Accordingly, we are adopting Rule 402 as proposed with minor clarifyingrevisions.90

Rule 402(a) generally will provide that XBRL-Related Documents submitted in the program:

• are not deemed filed for purposes of Section 18 of the Exchange Act91 or Section 34(b) ofthe Investment Company Act92 or otherwise subject to the liability of these sections;93

• are not deemed incorporated by reference;94

• are subject to all other liability and anti-fraud provisions of the Exchange Act and Invest-ment Company Act;95 and

• are deemed filed for purposes of Rule 103 of Regulation S-T.96

Rule 402(b) provides additional relief from liability under the Securities Act, Exchange Act,Public Utility Holding Company Act, Trust Indenture Act and Investment Company Act forinformation in a volunteer’s XBRL-Related Documents that complies with the content andformat requirements of Rule 401, to the extent that the information in the corresponding portionof the official EDGAR filing was not materially false or misleading.97

Rule 402(b) also provides additional relief from liability to volunteers that fail to comply withthe content and format requirements of Rule 401 if:

• the volunteer has made a good faith and reasonable attempt to comply with the contentand format requirements,

• as soon as reasonably practicable after the volunteer becomes aware that the informationin the XBRL-Related Documents does not comply with the content and format require-ments, the volunteer amends the XBRL-Related Documents to correct the problem, and

• the information in the corresponding official EDGAR filing was not materially false ormisleading.

As discussed earlier, several commenters asked us to clarify the reference in proposed Rule402(b) to presenting information in the XBRL-Related Documents that “reflects the sameinformation as appears in the corresponding portion of the official version of the filing to whichthey relate.”98 Accordingly, Rule 402(b), as adopted, clarifies the reference by specifying that theinformation must comply with the content and format requirements of Rule 401.

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One commenter asserted that proposed Rule 402(b) established a “negligence” standard andsuggested that we establish an “actual knowledge” standard instead. We have decided to adoptthe standard as proposed. A volunteer that fails to satisfy Rule 402(b) still may rely on theliability protections of Rule 402(a). In addition, the Commission has provided similar pro-tections to those in Rule 402 in other appropriate circumstances and it appears that these pro-tections are workable for filers in those circumstances.99

Finally, for purposes of the voluntary program, new paragraph (f) of Rules 13a-14 and 15d-14under the Exchange Act and new paragraph (d) of Rule 30a-2 under the Investment CompanyAct provide that XBRL-Related Documents are not subject to the certification requirements ofthese rules.100

One commenter voiced concern that investment companies would be discouraged from partic-ipating in the voluntary program if they were required to provide additional certifications whenfiling amendments whose sole purpose was to submit XBRL-Related Documents attached asexhibits.101 The commenter emphasized that the concern applied to investment companies inparticular because operating companies can file a Form 8-K rather than an amendment to submitXBRL-Related Documents after the corresponding official EDGAR filing has been filed. Rule12b-15 under the Exchange Act102 and Rule 8b-15 under the Investment Company Act103 gen-erally provide that any amendment to a filing that required a certification must contain anothercertification. We clarify that, consistent with the exclusion of XBRL-Related Documents fromthe disclosure certification requirements discussed above, an amendment whose sole purpose isto submit XBRL-Related Documents attached as exhibits for the voluntary program is not sub-ject to the certification requirements of Rule 12b-15 under the Exchange Act and Rule 8b-15under the Investment Company Act.

Two of the items these certifications must address are internal control over financial reportingand disclosure controls and procedures.104 In this regard, several commenters asked us to clarifythat XBRL-Related Documents are not subject to the internal control over financial reportingand disclosure controls and procedures provisions105 that we have adopted after passage of theSarbanes-Oxley Act.106 We clarify that, for purposes of the voluntary program and consistentwith the exclusion of XBRL-Related Documents from the disclosure certification requirementsdiscussed above, XBRL-Related Documents are not subject to any of the internal control overfinancial reporting provisions adopted under Section 404 of the Sarbanes-Oxley Act or the dis-closure controls and procedures provisions.107

III. PAPERWORK REDUCTION ACT

The new and amended rules contain “collection of information” requirements within the mean-ing of the Paperwork Reduction Act of 1995 (“PRA”).108 We published a notice requestingcomment on the collection of information requirements in the Proposing Release, and submitteda request to the Office of Management and Budget (“OMB”) for review in accordance with thePRA.109 OMB approved the request on a pilot basis. An agency may not conduct or sponsor, and

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a person is not required to respond to, an information collection unless it displays a currentlyvalid OMB control number.

The title of the new collection of information is “Voluntary XBRL-Related Documents” (OMBControl No. 3235-0611). This collection of information stems from already existing regulationsand forms adopted under the Exchange Act and Investment Company Act that set forth financialdisclosure requirements for annual and periodic reports as well as current reports.110 The newand amended rules will allow registrants to furnish specified financial information in XBRL-Related Documents as exhibits to their current or periodic reports filed on EDGAR. The speci-fied financial information already is required under existing periodic and annual report require-ments, but will be tagged using XBRL. During the voluntary program, registrants will continueto include this information in ASCII or HTML format in their official EDGAR filings, but alsowill furnish the XBRL tagged data as exhibits to these filings. The XBRL-Related Documentswill consist of an instance document, a schema file,111 and linkbase files.112 Submission of XBRL-Related Documents will be voluntary and the information submitted will not be kept con-fidential.

We estimate for PRA purposes that each of 80 participants will submit four sets of XBRL-Related Documents per year that will result in an internal preparation burden of 60 hours peryear and an external cost of $6,333 per year.113 We base this estimate on discussions regardingXBRL and data tagging in general.114

Two commenters responded to our request for comments on the PRA.115 Neither commenteraddressed specifically our actual estimates.

One commenter stated that our cost estimates are based on current manual processes, ignorecosts to those other than preparers and do not address the cost savings the commenter expectswill accrue in connection with preparation, distribution and analysis of financial informationover time as XBRL and the process efficiencies it enables take hold. As to non-preparer costs, thecommenter asserted that public accounting firms will need to invest in training and skilldevelopment to enable them to provide the assurance on XBRL data that the public ultimatelywill expect.116 These comments do not raise issues for our PRA estimates because our estimatesare based on registrant costs.

Similarly, the other commenter asserted that our cost estimates fall short because they are basedon the need of most registrants to automate what are today almost entirely manual reportingprocesses, take into account the cost to prepare but not consume information and omit antici-pated cost savings over time as adoption of XBRL spreads to more internal and external proc-esses of information exchange.117

We note that for PRA purposes we estimate the average yearly cost to a registrant that partic-ipates in the voluntary program over a three-year period.118 Consequently, our estimates areintended to reflect both initial cost and on-going cost over a three-year period. In calculatingthese costs, we have tried to take into account, among other things, the current state of reporting

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process automation, automation that likely would be introduced in connection with the initialcost incurred and the efficiencies that likely would be realized over the course of three years.

As reflected throughout this release, we also received comments, not specifically in response tothe PRA, directed at the substance of the new and amended rules. As previously discussed, wehave revised the proposals in response to these comments. As noted earlier, we are adding toproposed Rule 401 requirements to label XBRL data as “unaudited” or “unreviewed,” providecautionary language concerning reliance on XBRL-Related Documents and, in some cases, refer-ence the official filing from which XBRL data was derived. In this regard, we note the revision toproposed Rule 401 to make it optional, rather than required, to tag financial statement footnoteswould reduce the burden.119 Therefore, on balance, we do not change our estimates.

Compliance with the amendments is mandatory for those who wish to participate in the volun-tary program. There is no retention period for the information disclosed.

IV. COST-BENEFIT ANALYSIS

The adopted voluntary program reflects our desire to increase EDGAR’s efficiency and utility.The tagging of financial and other information submitted to us through EDGAR has the poten-tial to improve the analysis of that information. In order to evaluate data tagging, we are allow-ing registrants to furnish XBRL-Related Documents as exhibits to their official EDGAR filings.

A. Benefits

We believe that tagged financial information may allow more efficient and effective retrieval,research and analysis of financial information through automated means. The adopted voluntaryprogram will assist us in assessing whether using XBRL tagged financial information enhancesthe analysis of financial information included in Commission filings. The voluntary program alsowill facilitate our ability to assess the technical requirements of processing XBRL-RelatedDocuments using EDGAR.

Today, a number of companies use the financial information provided on EDGAR to createdatabases of tagged information that they resell to users of the information. Allowing registrantsto tag their own financial data has the potential to reduce third party participation in the taggingprocess and may reduce the cost of access to tagged information. Data tagging by registrantsmay make the tagging process more accurate. Additionally, the voluntary program may benefitregistrants and the public by permitting experimentation with data tagged using XBRL. In thefuture, increased availability of accurate, tagged financial information could reduce the cost ofresearch and analysis and create new opportunities for companies that compile, provide andanalyze data to provide more value added services.

Enhanced access to tagged information has the potential to increase analyst coverage andinvestor interest in a registrant’s securities, which could increase liquidity in the market and

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lower the cost of capital. These benefits, however, are difficult to quantify and may only be real-ized if a significant number of registrants provide data in XBRL format. Many of the com-menters cited one or more of these or related potential benefits.

As to related benefits, commenters stated, among other things, that:

• XBRL will lower the cost of producing information through automation;120

• XBRL will free resources from manual reporting to do work that adds value to thebusiness;121

• XBRL-tagged data will motivate registrants to provide comparable information;122

• registrants that use XBRL internally will have improved internal reporting processes;123

and

• tagged data may assist auditors.124

One commenter asserted that, in order to realize the benefit of enhanced financial analysis,XBRL must be revised by:

• restructuring the taxonomies to break down items into a more hierarchical format with-out alternative classification locations that can lead to non-comparable data;

• enabling end-users to validate and read the level of adherence to the standard industrialtaxonomies without high-level XBRL processing; and

• eliminating duplicate elements in the standard industrial taxonomies so end users can mapto a spreadsheet template or EDGAR web site/style sheet without complex programmingcode.125

Another commenter stated that the Commission should be able to assess more effectivelywhether the benefits of full-scale implementation justify the costs by taking steps in the initialimplementation of XBRL to assess:

• how XBRL is being used by investors and analysts;

• whether the structure of the XBRL specification facilitates broad-based use by sophisti-cated users and third-party software developers; and

• whether adequate safeguards are in place to ensure that the data is prepared and dis-seminated correctly.126

We acknowledge these commenters’ concerns and suggestions. We plan to monitor the voluntaryprogram accordingly.

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B. Costs

The voluntary program will lead to some additional costs for registrants choosing to furnishXBRL-Related Documents as exhibits to their periodic and current reports. Some companiesmay already tag their financial information using XBRL, in which case the additional cost ofsubmitting XBRL-Related Documents will be minimal. The proposals do not dictate thatcompanies follow any particular procedure; however, some participants may choose to acquireadditional software or hire consultants to assist them with data tagging. Based on discussionswith software providers and others familiar with XBRL, we estimate that between 60 and 100registrants will participate in the voluntary program at an annual cost per registrant based onour PRA estimates.127 Based on the foregoing discussion, we estimate the aggregate cost to regis-trants that choose to participate in the voluntary program will be between $1,009,980 and$1,683,300 in the first year.128

Due to the recent development of the technology, we have had limited data to quantify the costof implementing data tagging using XBRL. Further, methods of tagging data may vary consid-erably, making accurate cost estimates difficult. In the future, there may be additional costs toparticipants in the EDGAR data stream, including lower demand for data tagging and data dis-semination. The availability of registrant tagged data, however, may provide these participantswith alternative business opportunities.129

In the Proposing Release, we sought comments and supporting data on our estimates. Wereceived no comments specifically on the estimates we provided in our cost-benefit discussion.130

Three commenters expressly cited software and personnel costs as we did in the ProposingRelease.131 Some commenters cited other specific types of costs.

For example, two commenters suggested that the initial cost of participating in the voluntaryprogram would be significant.132 Two commenters suggested that costs would go down overtime,133 while one commenter stated that the costs would remain significant.134

Two commenters emphasized that XBRL is complex. One commenter asserted that its complex-ity has the potential to cause errors in both preparation and dissemination of financial data.135

The other commenter stated that the XBRL specification, though openly disclosed, is so complexthat it virtually requires use of specialized software tools to create, access and validate data and,as a result increases costs, reduces transparency, raises the potential for erroneous data use,unduly complicates the analytical process, restricts analytical creativity and violates the easyequal access nature of EDGAR.136

One commenter suggested that registrants that participate in the voluntary program at the outsetmay face a costly reworking of their XBRL implementation as methods and procedures arerefined and, to minimize this, the Commission could encourage experimentation but shouldoversee full implementation of XBRL by a small subset of registrants to make any appropriateadjustments before broad implementation.137

We intend to monitor the voluntary program as to complexity, ongoing adjustments and othermatters.

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V. FINAL REGULATORY FLEXIBILITY ANALYSIS

We prepared this Final Regulatory Flexibility Analysis (“FRFA”), in accordance with the Regu-latory Flexibility Act.138 This FRFA relates to amendments we are adopting that allow regis-trants, on a voluntary basis, to tag financial information in specified filings using XBRL. Theamendments set forth the method by which a registrant participating in the voluntary programmay furnish XBRL-Related Documents as an exhibit to its official EDGAR filing.

A. Reasons for, and Objectives of, the Amendments

The purpose of the amendments is to further our ability to assess the feasibility and desirabilityof using tagged data on a more widespread basis in EDGAR filings. We believe the program toaccept XBRL-Related Documents through EDGAR on a voluntary basis will better enable us tostudy the extent to which XBRL enhances the comparability of that data, its usefulness forfinancial analysis, and our staff’s ability to review and assess filings. In addition, the voluntaryprogram will help us assess the effect of XBRL data tagging on the quality and transparency offinancial information as well as the compatibility of XBRL data tagging with the Commission’sfinancial reporting requirements.

B. Significant Issues Raised by Public Comment

The Initial Regulatory Flexibility Act Analysis (“IRFA”) appeared in the Proposing Release. Werequested comment on any aspect of the IRFA, including the number of small entities that wouldbe affected by the proposals, the nature of the impact, and how to quantify the impact of theproposals.

Two commenters specifically responded to our request.139 Both commenters stated that:

• it is difficult to quantify the impact of the proposed rules on small entities;

• the impact will include the initial investment for first-time creation of an instance docu-ment followed by more efficient creation of subsequent instance documents;

• small entities that participate will benefit from greater market visibility due to the abilityof analysts to incorporate their results quickly into their analysis; and

• additional exemptions should not be required during the early stages of the voluntaryprogram and the extension of the program throughout calendar 2005 will enable moresmall entities to participate after their initial reporting under the Sarbanes-Oxleyrequirements.

One of the commenters asserted that many small entities may choose to defer participation untilsystem developers provide the ability to create XBRL documents as a standard output option,thereby making the process much easier and cheaper.140 Similarly, the other commenter statedthat it expected small entities, having documented their reporting processes and controls, to

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automate their systems and in doing so implement XBRL-enabled streamlining of theirreporting.141

C. Small Entities Subject to the Amendments

The voluntary program may have an impact on three broad categories of small entities: all filers;participants in the voluntary program; and non-filers that interact with EDGAR. Filers includeoperating companies and investment companies. Under Exchange Act Rule 0-10, for purposes ofthe Regulatory Flexibility Act, an issuer, other than an investment company, that on the last dayof its most recent fiscal year, has total assets of $5 million or less is a “small business” or “smallorganization.”142 We estimate there are approximately 2500 small operating company issuers.Under Rule 0-10 under the Investment Company Act, an investment company is a small entity ifit, together with other investment companies in the same group of related investment companies,has net assets of $50 million or less as of the end of its most recent fiscal year.143 We estimatethat there are approximately 186 investment companies that file reports on Forms N-CSR andN-Q that meet this definition. These and other filers may be affected by any change to theEDGAR system.

A small subset of these operating and investment company issuers may voluntarily participate inthe program; however, we estimate that number will be very low.

Finally, the dissemination of XBRL data may have an impact on those entities that interact withthe EDGAR data stream. We are aware that entities have developed certain products and serv-ices based on data in EDGAR; many entities disseminate, re-package, analyze and sell theinformation. The Commission does not regulate all these entities and therefore it is currently notfeasible to accurately estimate the number or size of these potentially affected entities. We soughtcomment on the number of small entities that would be impacted by the proposal and did notreceive any additional information that would allow us to accurately estimate the number or sizeof these potentially affected entities.

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements

The voluntary program is an experiment to determine the feasibility of using XBRL on a broaderbasis. Therefore, the cost of participating, the burden on the EDGAR system and the possibleeffect on those entities that use the EDGAR data stream are somewhat speculative at this point.

As the amendments relate to a voluntary filing program, no registrant is required to file XBRL-Related Documents. If a voluntary participant already uses XBRL to tag data, it may incurminimal additional cost to participate. Other participants who wish to volunteer may have topurchase software or retain a consultant to assist in tagging data. The inclusion of XBRL-Related Documents on EDGAR may also have effects on other filers, including small entities,who use the system.

The voluntary program may have some effect on any entity that interacts with the data dissem-ination stream. Allowing filers to submit information in XBRL, even voluntarily, may have an

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impact on entities providing EDGAR-based services and products. The limited, voluntary natureof the program will help the Commission assess the impact, if any, on these entities.

E. Agency Action to Minimize Effect on Small Entities

The Regulatory Flexibility Act directs us to consider significant alternatives that would accom-plish the stated objective, while minimizing any significant adverse impact on small entities. Thepurpose of the proposals is to further our ability to assess the feasibility and desirability of usingtagged data on a more widespread basis. Provision of the XBRL-Related Documents is volun-tary. We have considered different or simpler requirements for small entities. For tagged data toprovide benefits such as ready comparability, however, the data tagging system cannot havealternative requirements. Similarly, in order to achieve the benefits of data tagging, use of a sin-gle data tagging technology is necessary. If we determine to require data tagging in the future, wewill look to the results of the voluntary program to find alternatives to minimize any burden onsmall entities. Two commenters stated that additional exemptions should not be required forsmall entities during the early stages of the voluntary program.144

VI. CONSIDERATION OF IMPACT ON THE ECONOMY, BURDEN ONCOMPETITION AND PROMOTION OF EFFICIENCY, COMPETITION,AND CAPITAL FORMATION

Section 23(a)(2) of the Exchange Act145 requires us, when adopting rules under the ExchangeAct, to consider the impact that any new rule would have on competition. In addition, Sec-tion 23(a)(2) prohibits us from adopting any rule that would impose a burden on competitionnot necessary or appropriate in furtherance of the purposes of the Exchange Act. Furthermore,Section 2(b)146 of the Securities Act, Section 3(f)147 of the Exchange Act, and Section 2(c)148 ofthe Investment Company Act require us, when engaging in rulemaking where we are required toconsider or determine whether an action is necessary or appropriate in the public interest, toconsider, in addition to the protection of investors, whether the action will promote efficiency,competition, and capital formation.

In the Proposing Release, we considered the amendments in light of the standards set forth in theabove statutory sections. We requested comment on whether the proposals, if adopted, wouldpromote efficiency, competition and capital formation or have an impact or burden on competi-tion. We also requested commenters to provide empirical data and other factual support for theirviews if possible. No commenter addressed anti-competitive effects.149 Some commentersaddressed efficiency and capital formation which we considered and addressed in the cost-benefitsection.

The adopted amendments seek to implement a voluntary program and are intended to help usevaluate the usefulness to registrants, investors and the Commission of data tagging in general,and XBRL in particular. We believe that the amendments will promote efficiency because taggeddata may allow more efficient and effective retrieval, research and analysis of financialinformation through automated means. Because the program is voluntary and the amendments

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are designed to permit filers to provide information in a format that we believe has the potentialto be more useful to investors, we believe the amendments do not impose any burden oncompetition that is not necessary or appropriate in furtherance of the purposes of the ExchangeAct.

VII. STATUTORY BASIS AND TEXT OF AMENDMENTS

We are adopting the amendments outlined above under Sections 19(a) and 28 of the SecuritiesAct, Sections 3, 12, 13, 14, 15(d), 23(a), 35A and 36 of the Exchange Act, Section 20(a) of thePublic Utility Holding Company Act, Section 319(a) of the Trust Indenture Act, Sections 8, 30and 38 of the Investment Company Act and Section 3(a) of the Sarbanes-Oxley Act.

List of Subjects in CFR Parts 228, 229,232, 240, 249 and 270

Reporting and recordkeeping requirements, Securities.

For the reasons set forth above, we amend title 17, Chapter II of the Code of Federal Regulationsas follows:

PART 228 – INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESSISSUERS

1. The authority citation for Part 228 continues to read in part as follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 77ddd,77eee, 77ggg, 77hhh, 77jjj, 77nnn, 77sss, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll, 78mm, 80a-8,80a-29, 80a-30, 80a-37, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350.

* * * * *

2. Amend §228.601 by:

a. Revising the exhibit table; and

b. Adding paragraph (b)(100).

The revision and addition read as follows.

§ 228.601 (Item 601) Exhibits.

(a) * * *

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EXHIBIT TABLE

Securities Act Forms Exchange Act Forms

SB-2 S-2 S-3 S-43 S-8 10-SB 8-K5 10-QSB 10-KSB

(1) Underwriting agreement . . . . . . . . . X X X X X(2) Plan of purchase, sale,

reorganization, arrangement,liquidation or succession . . . . . . . . . . X X X X X X X X

(3) (i) Articles of Incorporation . . . . . . . X X X X X X(ii) Bylaws . . . . . . . . . . . . . . . . . . . . . . . X X X X X X(4) Instruments defining the rights of

security holders, includingindentures . . . . . . . . . . . . . . . . . . . . . . X X X X X X X X X

(5) Opinion on legality . . . . . . . . . . . . . X X X X X(6) No exhibit required . . . . . . . . . . . . . N/A N/A N/A N/A N/A N/A N/A N/A N/A(7) Correspondence from an

independent accountant regardingnon-reliance upon a previously issuedaudit report or completed interimreview . . . . . . . . . . . . . . . . . . . . . . . . . X

(8) Opinion on tax matters . . . . . . . . . . X X X X(9) Voting trust agreement and

amendments . . . . . . . . . . . . . . . . . . . . X X X X(10) Material contracts . . . . . . . . . . . . . X X X X X X(11) Statement re: computation of per

share earnings . . . . . . . . . . . . . . . . . . . X X X X X X(12) No exhibit required . . . . . . . . . . . . N/A N/A N/A N/A N/A N/A N/A N/A N/A(13) Annual report to security holders

for the last fiscal year, Form 10-Q or10-QSB or quarterly report tosecurity holders1 . . . . . . . . . . . . . . . . X X X X

(14) Code of ethics . . . . . . . . . . . . . . . . . X X(15) Letter on unaudited interim

financial information . . . . . . . . . . . . . X X X X X X(16) Letter on change in certifying

accountant4 . . . . . . . . . . . . . . . . . . . . X X X X X X(17) Letter on departure of director . . . X(18) Letter on change in accounting

principles . . . . . . . . . . . . . . . . . . . . . . X X(19) Reports furnished to security

holders . . . . . . . . . . . . . . . . . . . . . . . . X(20) Other documents or statements to

security holders or any documentincorporated by reference . . . . . . . . . X X

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Securities Act Forms Exchange Act Forms

SB-2 S-2 S-3 S-43 S-8 10-SB 8-K5 10-QSB 10-KSB

(21) Subsidiaries of the small businessissuer . . . . . . . . . . . . . . . . . . . . . . . . . . X X X X

(22) Published report regarding matterssubmitted to vote of securityholders . . . . . . . . . . . . . . . . . . . . . . . . . X X

(23) Consents of experts and counsel . . X X X X X X2 X2 X2

(24) Power of attorney . . . . . . . . . . . . . . X X X X X X X X X(25) Statement of eligibility of trustee . . X X X X(26) Invitations for competitive bids . . . X X X X(27) through (30) [Reserved] . . . . . . . . .(31) Rule 13a-14(a)/15d-14(a)

Certifications . . . . . . . . . . . . . . . . . . . . X X(32) Section 1350 Certifications . . . . . . . X X(33) through (98)[Reserved] . . . . . . . . . .(99) Additional exhibits . . . . . . . . . . . . . X X X X X X X X X(100) XBRL-Related Documents . . . . . . X X X X

1 Only if incorporated by reference into a prospectus and delivered to holders along with theprospectus as permitted by the registration statement; or in the case of a Form 10-KSB, wherethe annual report is incorporated by reference into the text of the Form 10-KSB.

2 Where the opinion of the expert or counsel has been incorporated by reference into a pre-viously filed Securities Act registration statement.

3 An issuer need not provide an exhibit if: (1) an election was made under Form S-4 to provideS-2 or S-3 disclosure; and (2) the form selected (S-2 or S-3) would not require the company toprovide the exhibit.

4 If required under Item 304 of Regulation S-B.

5 A Form 8-K exhibit is required only if relevant to the subject matter reported on the Form 8-Kreport. For example, if the Form 8-K pertains to the departure of a director, only the exhibitdescribed in paragraph (b)(17) of this section need be filed. A required exhibit may beincorporated by reference from a previous filing.

(b) * * *

(100) XBRL-Related Documents. An electronic filer that participates in the voluntary XBRL(eXtensible Business Reporting Language) program may submit XBRL-Related Documents(§232.11 of this chapter) in electronic format as an exhibit to: the filing to which they relate; anamendment to such filing; or a Form 8-K (§249.308 of this chapter) that references such filing, ifthe Form 8-K is submitted no earlier than the date of that filing.

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PART 229 – STANDARD INSTRUCTIONS FOR FILING FORMS UNDERSECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 ANDENERGY POLICY AND CONSERVATION ACT OF 1975 – REGULATIONS-K

3. The authority citation for Part 229 continues to read in part as follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 77ddd,77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w,78ll, 78mm, 79e, 79j, 79n, 79t, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-31(c), 80a-37,80a-38(a), 80a-39, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless otherwise noted.

* * * * *

4. Amend §229.601 by:

a. Revising the exhibit table; and

b. Adding paragraph (b)(100).

The revision and addition read as follows.

§ 229.601 (Item 601) Exhibits.

(a) * * *

Webmaster’s note: The exhibit table that followed was too wide to fit the website page format.Click to view table.

(b) * * *

(100) XBRL-Related Documents. An electronic filer that participates in the voluntary XBRL(eXtensible Business Reporting Language) program may submit XBRL-Related Documents(§232.11 of this chapter) in electronic format as an exhibit to: the filing to which they relate; anamendment to such filing; or a Form 8-K (§249.308 of this chapter) that references such filing, ifthe Form 8-K is submitted no earlier than date of that filing.

PART 232 – REGULATION S-T – GENERAL RULES AND REGULATIONSFOR ELECTRONIC FILINGS

5. The authority citation for Part 232 continues to read as follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a),78ll(d), 79t(a), 80a-8, 80a-29, 80a-30, 80a-37, and 7201 et seq.; and 18 U.S.C. 1350.

* * * * *

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6. Amend §232.11 by adding the following definition in alphabetical order.

§ 232.11 Definition of terms used in part 232.

* * * * *

XBRL-Related Documents. The term XBRL-Related Documents means documents related topresenting information in eXtensible Business Reporting Language that are part of a voluntarysubmission in electronic format in accordance with §232.401.

7. Amend §232.305 by revising paragraph (b) to read as follows:

§ 232.305 Number of characters per line; tabular and columnar information.

* * * * *

(b) Paragraph (a) of this section does not apply to HTML documents or XBRL-Related Docu-ments (§232.11).

8. Amend Part 232 by adding an undesignated center heading and text to §§232.401 and232.402 to read as follows:

XBRL-Related Documents

§ 232.401 XBRL-Related Document submissions.

(a) An electronic filer that participates in the voluntary XBRL (eXtensible Business ReportingLanguage) program may submit XBRL-Related Documents (§232.11) in electronic format as anexhibit to: the filing to which they relate; an amendment to such filing; or, if the electronic filer iseligible to file a Form 8-K (§249.308 of this chapter) or a Form 6-K (§249.306 of this chapter), aForm 8-K or a Form 6-K, as applicable, that references the filing to which the XBRL-RelatedDocuments relate if such Form 8-K or Form 6-K is submitted no earlier than the date of that fil-ing. The XBRL-Related Documents must comply with the content and format requirements ofthis section, be submitted as an exhibit to a form that contains the disclosure required by thissection and be submitted in accordance with the EDGAR Filer Manual and, as applicable, one ofItem 601(b)(100) of Regulation S-K (§229.601(b)(100) of this chapter), Item 601(b)(100) ofRegulation S-B (§228.601(b)(100) of this chapter), Form 20-F (§249.220f of this chapter), Form6-K or §270.8b-33 of this chapter.

(b) XBRL-Related Documents must consist of mandatory content and may consist of optionalcontent but only if the optional content accompanies the mandatory content in the same sub-mission.

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(1) Mandatory content consists of a complete set of information for all periods presented in thecorresponding official EDGAR filing from one or more of the following categories (as filed in thecorresponding official EDGAR filing):

(i) The complete set of financial statements (the only exceptions are that notes to the financialstatements and schedules related to the financial statements may be omitted unless the electronicfiler is a registered management investment company in which case it must include Schedule I –Investments in Securities of Unaffiliated Issuers (§210.12-12 of this chapter));

(i) Earnings information set forth in Form 6-K or Items 2.02 or 8.01 of Form 8-K (whether con-tained in the body of the Form 6-K or Form 8-K or in an exhibit, and whether filed orfurnished); or

(ii) Financial highlights or condensed financial information set forth in Item 8(a) of Form N-1A(§239.15A and §274.11A of this chapter), Item 4.1 of Form N-2 (§239.14 and §274.11a-1 ofthis chapter) or Item 4(a) of Form N-3 (§239.17a and §274.11b of this chapter), as applicable.

(2) Optional content can consist only of a complete set of information that is:

(i) For all periods presented in the corresponding official EDGAR filing;

(ii) Related to financial information in the corresponding official EDGAR filing that is simulta-neously submitted as mandatory content (as specified in paragraph (b)(1) of this section); and

(iii) From one or more of the following categories (as filed in the corresponding official EDGARfiling):

(A) Audit opinions (as specified by Rule 2-02 of Regulation S-X (§210.2-02 of this chapter));

(B) Interim review reports (as specified by Rule 10-01(d) of Regulation S-X (§210.10-01(d) ofthis chapter));

(C) Reports of management on the financial statements;

(D) Certifications;

(E) Management’s discussion and analysis of financial condition and results of operations (asspecified by Item 303 of Regulation S-K (§229.303 of this chapter));

(F) Management’s discussion and analysis or plan of operation (as specified by Item 303 ofRegulation S-B (§228.303 of this chapter));

(G) Operating and financial review and prospects (as specified by Item 5 of Form 20-F); or

(H) Management’s discussion of fund performance (as specified by Item 22(b)(7) of Form N-1A).

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(c) XBRL-Related Documents must appear in voluntary program format. XBRL-Related Docu-ments appear in voluntary program format if:

(1) Each data element (i.e., all text and all line item names and associated values, dates and otherlabels) contained in the XBRL-Related Documents reflects the same information in the corre-sponding official EDGAR filing (i.e., the HTML or ASCII version);

(2) No data element contained in the corresponding official EDGAR filing is changed, deleted orsummarized in the XBRL-Related Documents;

(3) The XBRL-Related Documents correlate to the appropriate version of a standard taxonomy,supplemented with extension taxonomies as specified in the EDGAR Filer Manual (§232.11);

(4) Each data element contained in the XBRL-Related Documents is matched with an appro-priate tag in accordance with any applicable taxonomy; and

(5) The XBRL-Related Documents contain any additional mark-up related content (e.g., theXBRL tags themselves, identification of the core XML documents used and other technologyrelated content) not found in the corresponding official EDGAR filing that are necessary tocomply with the EDGAR Filer Manual requirements.

(d) The filing with which XBRL-Related Documents are submitted as an exhibit must containthe disclosures specified in paragraph (d)(1) of this section in the location specified in paragraph(d)(2) of this section.

(1) The filing must disclose:

(i) That the financial information contained in the XBRL-Related Documents is “unaudited” or“unreviewed,” as applicable;

(ii) That the purpose of submitting the XBRL-Related Documents is to test the related formatand technology and, as a result, investors should not rely on the XBRL-Related Documents inmaking investment decisions; and

(iii) The identity of the corresponding official EDGAR filing (but only if the filing is a Form 8-Kor Form 6-K or an amendment to a Form 8-K or Form 6-K and a purpose of filing the form wasto submit as an exhibit XBRL-Related Documents that present information related to financialinformation filed as part of a different form in the corresponding official EDGAR filing).

(2) The disclosures required by paragraph (d)(1) of this section must appear, as applicable, in:

(i) The exhibit index of a Form 10-K (§249.310 of this chapter), 10-Q (§249.308a of thischapter), 10 (§249.210 of this chapter), 10-SB (§249.210b of this chapter), 10-KSB (§249.310bof this chapter), 10-QSB (§249.308b of this chapter) or 20-F;

(ii) Item 2.02 or 8.01 of a Form 8-K; or

(iii) The body of a Form 6-K, N-CSR (§274.128 of this chapter) or N-Q (§274.130 of thischapter).

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Note to §232.401: Although XBRL-Related Documents are required by this section to complywith content and format requirements related to the corresponding official EDGAR filing, thepurpose of submitting the XBRL-Related Documents is to test the related format and technologyand, as a result, investors and others should continue to rely on the official version of the filingand not rely on the XBRL-Related Documents in making investment decisions.

§ 232.402 Liability for XBRL-Related Documents.

(a) Not deemed filed for liability purposes. XBRL-Related Documents, regardless of whetherthey are exhibits to a document incorporated by reference into a filing:

(1) Are not deemed filed for purposes of section 18 of the Exchange Act (15 U.S.C. 78r) or sec-tion 34(b) of the Investment Company Act (15 U.S.C. 80a-33(b)) or otherwise subject to theliabilities of these sections;

(2) Are not deemed incorporated by reference;

(3) Are subject to all other liability and anti-fraud provisions of these Acts; and

(4) Are deemed filed for purposes of Item 103 of Regulation S-T (§232.103).

(b) Accurate reflection of underlying documents. An electronic filer is not liable under the Secu-rities Act, Exchange Act, Public Utility Act, Trust Indenture Act or Investment Company Act forinformation in its XBRL-Related Documents that complies with the requirements of Item 401 ofRegulation S-T (§232.401) to the extent that such information was not materially false or mis-leading in the corresponding official EDGAR filing. To the extent the information in an elec-tronic filer’s XBRL-Related Documents does not comply with the requirements of Item 401, theinformation in the XBRL-Related Documents will be deemed to comply with Item 401 for pur-poses of this paragraph if the electronic filer makes a good faith and reasonable attempt tocomply with Item 401 and, as soon as reasonably practicable after the electronic filer becomesaware that the information in the XBRL-Related Documents does not comply with Item 401, theelectronic filer amends the XBRL-Related Documents and, as a result, the information complieswith Item 401.

PART 240 – GENERAL RULES AND REGULATIONS, SECURITIESEXCHANGE ACT OF 1934

9. The authority citation for Part 240 continues to read in part as follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt,78c, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5,78w, 78x, 78ll, 78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 80b-11, and7201et seq.; and 18 U.S.C. 1350, unless otherwise noted.

* * * * *

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10. Amend §240.13a-14 by adding paragraph (f) to read as follows:

§ 240.13a-14 Certification of disclosure in annual and quarterly reports.

* * * * *

(f) The certification requirements of this section do not apply to XBRL-Related Documents, asdefined in §232.11 of this chapter.

11. Amend §240.15d-14 by adding paragraph (f) to read as follows:

§ 240.15d-14 Certification of disclosure in annual and quarterly reports.

* * * * *

(f) The certification requirements of this section do not apply to XBRL-Related Documents, asdefined in §232.11 of this chapter.

PART 249 – FORMS, SECURITIES EXCHANGE ACT OF 1934

12. The authority citation for Part 249 continues to read in part as follows:

Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; and 18 U.S.C. 1350, unless otherwise noted.

* * * * *

13. Amend Form 20-F (referenced in (§249.220f) by reserving paragraphs 16 through 99 andadding paragraph 100 at the end of “Instructions as to Exhibits” to read as follows:

Note – The text of Form 20-F does not and this amendment will not appear inthe Code of Federal Regulations.

FORM 20-F

* * * * *

INSTRUCTIONS AS TO EXHIBITS

* * * * *

16 through 99

[Reserved]

100. XBRL-Related Documents. XBRL-Related Documents (§232.11 of this chapter).

* * * * *

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14. Amend Form 6-K (referenced in (§249.306) by adding paragraph (5) to General InstructionC to read as follows:

Note – The text of Form 6-K does not and this amendment will not appear inthe Code of Federal Regulations.

Form 6-K

* * * * *

GENERAL INSTRUCTIONS

* * * * *

C. * * *

(5) XBRL-Related Documents. XBRL-Related Documents (§232.11 of this chapter) can besubmitted if listed as exhibit 100.

* * * * *

PART 270 – GENERAL RULES AND REGULATIONS, INVESTMENTCOMPANY ACT OF 1940

15. The authority citation for Part 270 continues to read in part as follows:

Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, and 80a-39, unless otherwise noted.

* * * * *

16. Revise §270.8b-1 to read as follows:

§ 270.8b-1 Scope of §§270.8b-1 to 270.8b-33.

The rules contained in §§270.8b-1 to 270.8b-33 shall govern all registration statements pursuantto section 8 of the Act (15 U.S.C. 80a-8), including notifications of registration pursuant to sec-tion 8(a), and all reports pursuant to section 30(a) or (b) of the Act (15 U.S.C. 80a-29(a) or (b)),including all amendments to such statements and reports, except that any provision in a formcovering the same subject matter as any such rule shall be controlling.

17. Amend §270.8b-2 by revising the phrase “§§270.8b-1 through 270.8b-32” to read“§§270.8b-1 through 270.8b-33” in the introductory text of the section.

18. Add §270.8b-33 to read as follows:

§ 270.8b-33 XBRL-Related Documents.

A registrant that participates in the voluntary XBRL (eXtensible Business Reporting Language)program may submit, in electronic format as an exhibit to a filing on Form N-CSR (§§249.331

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and 274.128 of this chapter) or Form N-Q (§§249.332 and 274.130 of this chapter) to whichthey relate, XBRL-Related Documents (§232.11 of this chapter). A registrant that submitsXBRL-Related Documents as an exhibit to a form must name each XBRL-Related Document“EX-100” as specified in the EDGAR Filer Manual and submit the XBRL-Related Documents insuch a manner that will permit the information for each series of an investment company regis-trant and each contract of an insurance company separate account to be separately identifiable.A registrant may submit such exhibit with, or in an amendment to, the filing to which it relates.

19. Amend §270.30a-2 by adding paragraph (d) to read as follows:

§ 270.30a-2 Certification of Forms N-CSR and N-Q.

* * * * *

(d) The certification requirements of this section do not apply to XBRL-Related Documents, asdefined in §232.11 of this chapter.

* * * * *

By the Commission.

Margaret H. McFarlandDeputy Secretary

February 3, 2005

1 The amendments were proposed in Release No. 33-8496 (Sept. 27, 2004) [69 FR 59094](“Proposing Release”).

2 17 CFR 232.401.

3 17 CFR 232.402.

4 17 CFR 232.11.

5 17 CFR 232.305.

6 17 CFR 232.10 et seq. We also are adopting an amendment to add a heading for Rules 401 and402.

7 17 CFR 229.601.

8 17 CFR 229.10 et seq.

9 17 CFR 228.601.

10 17 CFR 228.10 et seq.

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11 17 CFR 240.13a-14.

12 17 CFR 240.15d-14.

13 15 U.S.C. 78a et seq.

14 17 CFR 270.8b-1.

15 17 CFR 270.8b-2.

16 17 CFR 270.30a-2.

17 15 U.S.C. 80a-1 et seq.

18 17 CFR 249.220f.

19 17 CFR 249.306.

20 XBRL is an open standard that provides a format for tagging financial information and allowsusers to extract, exchange, analyze and display financial information. XBRL was developed andcontinues to be supported by XBRL International, a collaborative consortium of approximately250 organizations representing many constituents of the financial reporting community. Orga-nizations in the consortium include issuers, public accounting firms, software companies, filingagents, data aggregators, stock exchanges, regulators, financial services companies, and industryassociations. The Commission is not a member of the consortium. XBRL International and itsrelated entities have been developing standard taxonomies that they state classify and definefinancial information in accordance with U.S. Generally Accepted Accounting Principles(“GAAP”) and our regulations. An XBRL taxonomy is a standard description and classificationsystem for business reporting and financial data. Tags consist of specific financial data, such asthe line items presented in the financial statements, and words or labels, such as headers in thenotes to the financial statements. See http://www.xbrl.org. and Release No. 33-8497 (Sept. 27,2004) [69 FR 59111] (“Concept Release”) for a further description of XBRL.

21 Rules 100 and 101 of Regulation S-T (17 CFR 232.100 and 232.101).

22 See Rule 301 of Regulation S-T (17 CFR 232.301). We originally adopted the EDGAR FilerManual on July 1, 1993, with an effective date of July 26, 1993. Release No. 33-6986 (Apr. 1,1993) [58 FR 18638]. We most recently updated the EDGAR Filer Manual on August 6, 2004,the current version of which can be found at http://www.sec.gov/info/edgar.shtml. See ReleaseNo. 33-8454 (Aug. 6, 2004) [69 FR 49803].

23 See http://www.xbrl.org.

24 See letters from American Accounting Association (“AAA”); American Institute of CertifiedPublic Accountants (“AICPA”); Arbortext XML Solutions; Blastradius; Business Wire (“BusWire”); Capricorn Research; The Consortium of EDGAR Filing Agents and Software Developers

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(“CEFASD”); Steve Cushing; Deloitte & Touche LLP (“D&T”); EDGAR Online, Inc.; Ernst &Young LLP (“E&Y”); Federal Deposit Insurance Corporation; Federal Financial InstitutionsExamination Council; Financial Executives International (“FEI”); C.R. Fonseca; Grant ThorntonLLP (“Grant Thornton”); Institute of Management Accountants (“IMA”); Investment CompanyInstitute (“ICI”); KPMG LLP (“KPMG”); Eric Paul Linder (“Linder”); Microsoft Corporation(“MSFT”); James L. Nesfield; New York Society of Security Analysts (“NYSSA”); New YorkState Bar Association (“NYSBA”); PricewaterhouseCoopers LLP (“PWC”); PR NewswireAssociation LLC; Barry J. Reischling; and Spredgar Software (“Spredgar”). The public commentswe received and a summary of the comments prepared by our staff are available for inspection inour Public Reference Room at 450 Fifth Street, NW, Washington, D.C. 20549, in File No.S7-35-04, or may be viewed at http://www.sec.gov/rules/proposed/s73504.shtml.

25 See, for example, the letters from AAA, AICPA, CEFASD, E&Y, FEI, IMA and PWC.

26 See, for example, the letters from AAA, AICPA, D&T, IMA, KPMG and MSFT.

27 Rule 301 of Regulation S-T, the regulation that governs the preparation and transmission ofelectronic filings on the Commission’s EDGAR system, requires electronic filings to be preparedin accordance with the provisions of the EDGAR Filer Manual. The Filer Manual contains thetechnical formatting requirements for electronic submissions. Filers must comply with thoserequirements to ensure the timely receipt and acceptance of documents submitted to theCommission in an electronic format. See the companion EDGAR Filer Manual adopting release(Release No. 33-8528 (Feb. 3, 2005)) updating the EDGAR Filer Manual to reflect EDGARRelease 8.10.

28 These submissions will be required to be made in accordance with the EDGAR Filer Manualand the exhibit provisions of Item 601(b) (100) of Regulation S-K or S-B, revised Form 20-F,revised Form 6-K or Rule 8b-33 under the Investment Company Act, as applicable. As proposed,the items and rule will list the Exchange Act and Investment Company Act filings, in addition toForms 20-F and 6-K, with which volunteers can submit XBRL-Related Documents. We areadopting as proposed revisions to Rules 8b-1 and 8b-2 under the Investment Company Act toreflect the addition of Rule 8b-33. Finally, we are adopting as proposed the revision to Rule305(b) of Regulation S-T to exempt the submissions from the formatting requirements of Rule305(a) because the formatting requirements are unnecessary in this context.

29 17 CFR 249.308. Commenters supported allowing volunteers to furnish XBRL data in a Form8-K. See, for example, the letters from CEFASD and KPMG.

30 As proposed, we are revising Form 6-K to permit submission of XBRL-Related Documents asExhibit 100.

31 As noted in the Proposing Release, in addition to domestic issuers, the voluntary program isavailable to foreign private issuers that otherwise file their primary financial statements inaccordance with U.S. GAAP.

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32 See Rules 13a-11(b) and 15d-11(b) under the Exchange Act. [17 CFR 240.13a-11(b) and240.15d-11(b)].

33 17 CFR 249.308a.

34 The disclosure requirement also addresses the concern of one commenter (CEFASD) about aForm 8-K whose sole purpose is to accompany an XBRL Exhibit 100. The commenter noted thatin such circumstances, if the exhibit were removed, the surviving, disseminated cover page wouldcontain no useful information. The commenter recommended that in such circumstances, theCommission should suspend the entire filing. Although it would not be feasible to suspend theentire filing, the required disclosures would clearly identify the purpose of the filing. In thisregard, we note that even without the purpose disclosure requirement, a form with an exhibit listwould refer to Exhibit 100 and that would identify the intent to submit XBRL data.

35 17 CFR 249.310.

36 17 CFR 249.210.

37 17 CFR 249.210b.

38 17 CFR 249.310b.

39 17 CFR 249.308b.

40 17 CFR 249.331 and 274.128.

41 17 CFR 249.332 and 274.130.

42 See the letters from AICPA, E&Y and PWC.

43 See the letter from AICPA.

44 See the letter from PWC.

45 As noted in Section I of this release, an XBRL taxonomy is intended to be a standard descrip-tion and classification system for business reporting and financial data. An instance document,which is a machine readable form, pairs a tag from the taxonomy with the related piece offinancial information. For additional detail regarding instance documents, see Section II.C.1 ofthe Proposing Release.

46 See the letter from E&Y.

47 As further discussed below, XBRL-Related Documents will not be deemed filed orincorporated by reference regardless of whether they are exhibits to a document incorporated byreference into another filing (e.g., an XBRL exhibit to a Form 10-K filing will not beincorporated into a Form S-3 [17 CFR 239.13] registration statement even though other portionsof the Form 10-K are so incorporated).

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48 For example, if the volunteer submitted XBRL data with a Form 8-K, it should amend theForm 8-K. A volunteer must amend XBRL-Related Documents it submitted earlier if they didnot comply with the content and format requirements of new Rule 401.

49 See, for example, the letters from AAA, AICPA, Blastradius, CEFASD, E&Y, IMA, KPMG,MSFT and PWC.

50 See, for example, the letters from AAA, Blastradius and IMA.

51 See the letter from MSFT.

52 See, for example, the letter from D&T.

53 See the letters from AICPA, E&Y and NYSBA.

54 Although volunteers may furnish data as Mandatory Content from certain specific categoriesof financial information in the corresponding official EDGAR filing in XBRL format (e.g., finan-cial statements only, omitting notes), the financial information in the specific category providedin XBRL format must be complete (e.g., if the financial statements are provided, income state-ment, balance sheet, cash flows and equity statements must all be submitted).

55 In the Proposing Release at note 47, we stated that financial statements other than those forinvestment company volunteers should not include the related schedules when submitted asXBRL-Related Documents in the voluntary program. In order to provide additional testingopportunities, however, we are permitting operating companies to provide these schedules in thevoluntary program. We further discuss below related schedules of investment companies.

56 Rule 12-12 of Regulation S-X [17 CFR 210.12-12].

57 Item 8(a) of Form N-1A, Item 4.1 of Form N-2 and Item 4(a) of Form N-3 [17 CFR 274.11A,274.11a-1 and 274.11b]. Forms N-1A, N-2 and N-3 also are authorized under the Securities Actof 1933 (“Securities Act”) [15 U.S.C 77a et seq.] under 17 CFR 239.15A, 239.14 and 239.17a.

58 Although volunteers may furnish data as Optional Content from certain specific categories ofinformation in the corresponding official EDGAR filing in XBRL format (e.g., MD&A), theinformation in the specific category provided in XBRL format must be complete (e.g., if MD&Ais provided, all the MD&A in the corresponding official EDGAR filing must be submitted).

59 Rule 2-02 of Regulation S-X [17 CFR 210.2-02].

60 Rule 10-01(d) of Regulation S-X [17 CFR 210.10-01(d)].

61 Item 303 of Regulation S-K [17 CFR 229.303].

62 Item 303 of Regulation S-B [17 CFR 228.303].

63 Item 5 of Form 20-F.

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64 Item 22(b)(7) of Form N-1A.

65 See the letters from AAA, AICPA, D&T, IMA, KPMG and MSFT.

66 See, for example, the letters from AICPA, D&T, KPMG and PWC.

67 See, for example, the letters from D&T and KPMG.

68 See, for example, the letters from AICPA, D&T, KPMG and MSFT.

69 See, for example, the letters from CESFASD (allow a single tag for all notes) and PWC (limitthe notes required to be tagged).

70 See, for example, the letters from AICPA, D&T, E&Y and KPMG.

71 See the letter from ICI.

72 Registered management investment company volunteers may, but are not required to, submitother related schedules in XBRL format with financial statements in XBRL format including thefollowing: Schedule II – Investments – other than securities [17 CFR 210.12-13]; Schedule III –Investments in and advances to affiliates [17 CFR 210.12-14]; Schedule IV – Investments – secu-rities sold short [17 CFR 210.12-12A]; Schedule V – Open option contracts written [17 CFR210.12-12B]; and Schedule VI – Summary schedule of investments in securities of unaffiliatedissuers [17 CFR 210.12-12C].

73 See, for example, the letters from AICPA, D&T, NYSBA and PWC.

74 See the letters from D&T and PWC.

75 See the letter from NYSBA.

76 See the letter from E&Y.

77 Commenters generally supported not requiring certifications. See, for example, the letters fromAAA, AICPA, CEFASD, D&T, E&Y, FEI, IMA, KPMG, MSFT, NYSBA, and PWC. Severalcommenters further suggested that volunteers should be allowed to submit certifications. See, forexample, the letters from AICPA, D&T, IMA and PWC.

78 The XBRL Consortium has publicly announced that it will finalize the Commercial andIndustrial, Banking and Savings Institutions and Insurance standard taxonomies by February 28,2005. It also has publicly announced that it will finalize the Investment Company taxonomy byMarch 31, 2005. See http://www.xbrl.org.

79 This taxonomy has detailed financial reporting elements specific to commercial and industrial-type companies. If a registrant is not a bank, savings institution, insurance company, broker-dealer or investment company, it would likely use the commercial and industrial standardtaxonomy. See http://www.xbrl.org.

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80 The investment companies taxonomy was released for public comment on December 21, 2004with a request for comments to be submitted by January 20, 2005.

81 Commenters noted that they were unaware of any other standard taxonomies that are suffi-ciently developed to support Commission submissions. Some commenters noted that theCommission may wish to consider allowing volunteers to use International Financial ReportingStandards, formerly known as International Accounting Standards, taxonomies as a means ofencouraging non-U.S. issuers to participate. See the letters from AAA, CEFASD, FEI, IMA,MSFT and PWC. We are continuing to consider this suggestion.

82 See, for example, the letters from AAA, AICPA, FEI, IMA, KPMG, MSFT and PWC.

83 See, for example, the letters from AAA, AICPA, IMA, MSFT and PWC.

84 See the letter from Linder.

85 The letter from AAA noted that the Commission should develop a small taxonomy that coversthe key reporting elements.

86 See, for example, the letters from AAA, CEFASD, IMA, KPMG and PWC. One commenter,however, stated that the Commission should provide a standard template to render informationand allow participants to provide their own company specific presentation template. See the let-ter from Grant Thornton.

87 See the letters from CEFASD, IMA and KPMG.

88 See the letters from Blastradius and FEI.

89 See, for example, AAA, AICPA and FEI.

90 This rule will not affect in any way participants’ existing obligations with respect to officialfilings. The official financial information required to be filed by participants in HTML or ASCIIwill continue to be subject to the liability provisions of the federal securities laws.

91 15 U.S.C 78r.

92 15 U.S.C. 80a-33(b). We modified proposed Rule 402(a) by omitting references to the XBRL-Related Documents as not deemed filed under Section 16 of the Public Utility Holding CompanyAct of 1935 (“Public Utility Holding Company Act”) [15 U.S.C. 79p] and Section 323 of theTrust Indenture Act of 1939 (“Trust Indenture Act”) [15 U.S.C. 77www]. We omitted thesereferences as unnecessary because XBRL-Related Documents only will be submitted as exhibitsto filings under the Exchange Act and the Investment Company Act.

93 We will caution users on the Commission’s Web site that, although XBRL-Related Documentsare required to comply with format and content requirements related to the corresponding offi-cial filing, the purpose of submitting the XBRL-Related Documents is to test the related format

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and technology and, as a result, investors and others should continue to rely on the official ver-sion of the filing and not rely on the XBRL-Related Documents in making investment decisions.

94 Because the XBRL-Related Documents will not be filed under the Exchange Act, they will notbe incorporated by reference into registration statements filed under the Securities Act or pro-spectuses they contain. These protections will apply regardless of whether the documents areexhibits to a document otherwise incorporated by reference into a filing.

95 For example, material misstatements or omissions in an XBRL submission will continue to besubject to liability under Section 10(b) [15 U.S.C. 78j(b)] and Rule 10b-5 [17 CFR 240.10b-5]under the Exchange Act.

96 17 CFR 232.103. Rule 103 generally provides that an electronic filer is not subject to liabilityas to an error or omission in an electronic filing resulting solely from electronic transmissionerrors beyond the control of the filer if the filer corrects the problem through an amendment assoon as reasonably practicable after the filer becomes aware of the problem.

97 XBRL-Related Documents that do not meet the requirements for the relief provided by Rule402(b) still would receive the relief provided by Rule 402(a). In adopting Rule 402(a) wechanged our proposal to remove references to liability relief under the Securities Act, PublicUtility Holding Company Act and Trust Indenture Act because XBRL-Related Documents can-not be submitted under those Acts. We maintained these references in Rule 402(b), however,because, unlike Rule 402(a), Rule 402(b)’s protections are not tied to filing status.

98 See, for example, the letters from AICPA, D&T, NYSBA and PWC.

99 See, for example, General Instruction B.2 of Form 8-K (“The information in a report furnishedpursuant to Item 2.02 (Results of Operations and Financial Condition) or Item 7.01 (RegulationFD Disclosure) shall not be deemed to be ‘filed’ for purposes of Section 18 of the Exchange Actor otherwise subject to the liabilities of that section unless the registrant specifically states thatthe information is to be considered ‘filed’ under the Exchange Act or incorporates it by referenceinto a filing under the Securities Act or Exchange Act.”).

100 As a result of recently adopted rule revisions, we are adopting new paragraph (f) rather thanthe proposed new paragraph (h) of Rules 13a-14 and 15d-14. After we issued the ProposingRelease, we adopted amendments to Rules 13a-14 and 15d-14, effective March 8, 2005, that,among other things, remove paragraphs (f) and (g) of these rules. Consequently, in order to adda new last paragraph to each of these rules, we add paragraph (f). See Release No. 33-8518(Dec. 22, 2004) [70 FR 1506].

101 See the letter from ICI.

102 17 CFR 240.12b-15.

103 17 CFR 270.8b-15.

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104 See, for example, Item 601(b)(31)(i) of Regulation S-K [17 CFR 229.601(b)(31)(i)].

105 See Exchange Act Rule 13a-15(e) and Investment Company Act Rule 30a-3(c) (defining“disclosure controls and procedures”) and Exchange Act Rule 13a-15(f) and Investment Com-pany Act Rule 30a-3(d) (defining “internal control over financial reporting”) [17 CFR 240.13a-15(e), 270.30a-3(c), 240.13a-15(f) and 270.30a-3(d)].

106 See, for example, the letters from E&Y (addressing internal control over financial reporting)and NYSBA (addressing internal control over financial reporting and disclosure controls andprocedures).

107 Section 404 and the rules we have adopted under that section do not apply to registeredmanagement investment companies.

108 44 U.S.C. 3501 et seq.

109 44 U.S.C. 3507(d) and 5 CFR 1320.11.

110 The proposed voluntary program allows for XBRL-Related Documents to be furnished inconnection with Exchange Act registration through Forms 10, 10-SB and 20-F. We expect,however, that volunteers for the program will already be subject to Exchange Act reportingrequirements and, as a result, do not include an analysis relating to Forms 10 and 10-SB or, tothe extent it can be used to for Exchange Act registration, Form 20-F.

111 The XBRL data file that a participant creates can adhere to either a standard taxonomy or astandard taxonomy with extensions. Extensions to the standard taxonomy further refine the datacontained in the standard taxonomy so that the XBRL data can present the information in thecorresponding official EDGAR filing. Such extensions would be included in a schema file. Foradditional detail regarding schema files, see Section II.C.2 of the Proposing Release.

112 Linkbase files, in general, manage references, labels and relationships for an instance docu-ment. For additional detail regarding linkbase files, see Section II.C.3 of the Proposing Release.

113 In our initial PRA request, our external cost estimate of $6,000 focused on the cost of pro-fessionals and consultants. It is our understanding that many participants will also have annualsoftware licensing costs. From further discussions with software providers and others familiarwith XBRL, we estimate that the cost of licensing software will range from $200 to $3,000 eachyear, with the majority of companies licensing less complex XBRL software in the $200 to $500range. We also understand from these discussions that software providers have indicated thatthey intend to provide these products for free in the initial stages of the voluntary program. Inorder to determine a price estimate, we base our software cost estimate at $500, which is thehighest cost for the simpler XBRL software license. We have further assumed that the first yearlicense fee will be waived. Because the PRA estimates represent the average burden over a three-year period, we estimate the average burden for software license costs to be $333 per year.

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114 See Proposing Release Section VII.A.1 for a further description of our PRA estimate. We notethat we expect 80 participants per year. The calculations presented in the description in theProposing Release based on the expected number of participants per year were based on 80 par-ticipants a year.

115 See the letters from AICPA and PWC.

116 See the letter from AICPA.

117 See the letter from PWC.

118 While the PRA requires an estimate based on a hypothetical three years of participation, asnoted earlier, a registrant could participate in the voluntary program by submitting XBRL dataover a shorter period or even just once as the registrant chooses.

119 See Proposing Release, Part VII for a description of, and the burden estimates for, the volun-tary program. We note that we expect 80 participants per year. The calculations presented in thedescription based on the expected number of participants per year were based on 80 participantsa year.

120 See the letters from AICPA and PWC.

121 See the letter from PWC.

122 See the letters from AAA, D&T (market demand will encourage registrants to adopt financialreporting practices that increase comparability) and Spredgar (XBRL would produce comparabledata across companies).

123 See the letters from AAA, Bus Wire and IMA (creation of financial data in an XML-basedlanguage will prepare the registrant to re-use the data for internal reporting activities that mighthelp the registrant improve its internal controls).

124 See the letter from D&T (tagged data allows auditors to do better risk assessment and ana-lytics and may allow systematic identification of unusual transactions the net result of whichmay be a more effective and efficient audit process).

125 See the letters from Linder and NYSSA (supports these changes).

126 See the letter from NYSSA.

127 To determine the annual cost, assuming 80 registrants will participate, we estimate that theincremental burden would result in 4800 internal burden hours and $506,640 in external costsincluding $26,640 in software licensing costs. Assuming a cost of $175 per hour for in-houseprofessional staff, the total cost associated with internal burden hours would be $840,000.Consequently, the PRA cost estimate is $1,346,640 or $16,833 per registrant. Proposing Releasenote 87 inadvertently overestimated the number of internal burden hours and, as a result, also

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overestimated the total in-house professional staff cost and the aggregate cost estimate on bothper registrant and gross bases.

128 Based on discussions with software providers and other familiar with XBRL, we believe thatour initial estimate of software costs at $3,000 per registrant is not an accurate assumption ofthe average cost to participants. We currently understand that annual software licensing costswill likely range between $200 and $3,000 and that a number of software providers intend toprovide XBRL software free in the initial stages of the program. We have revised our PRA esti-mates to account for software licensing costs and no longer treat them separately in the cost-benefit analysis. The figures in this release correct the estimates provided in the ProposingRelease.

129 For example, an entity that traditionally has focused on data dissemination might be able tore-direct its data processing abilities to perform and sell analyses of registrant-tagged data.

130 We note, however, the estimates we provided in our cost-benefit discussion were based on ourPRA estimates that two commenters questioned as previously discussed in Section III.

131 See the letters from AAA, D&T and IMA.

132 See the letters from D&T and NYSSA. One commenter stated that it believed the assumedinvestment in training and workload to produce the first filing has been underestimated. See theletter from Grant Thornton.

133 See the letters from D&T and PWC. Another commenter addressing costs over time statedthat the cost of capital will be reduced in relation to improved transparency and timeliness andthis reduction would more than offset the costs of XBRL if XBRL’s potential benefits were real-ized. See the letter from AAA.

134 See the letter from NYSSA.

135 See the letter from NYSSA.

136 See the letters from Linder and NYSSA (some of its members are concerned that XBRL is socomplex that it would be difficult and costly for even sophisticated users to create applications).Another commenter stated, however, that unless taxonomies are a good fit with companies’reporting practices, there will be a potential loss of data that would force the capital markets toprocess two sets of data with a negative effect on trust that increases relational risk and, con-sequently, the cost of capital. See the letter from AAA.

137 See the letter from NYSSA.

138 5 U.S.C. 603.

139 See the letters from AICPA and PWC.

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140 See the letter from AICPA.

141 See the letter from PWC.

142 17 CFR 240.0-10.

143 17 CFR 270.0-10.

144 See the letters from AICPA and PWC.

145 15 U.S.C. 78w(a)(2).

146 15 U.S.C. 77b(b).

147 15 U.S.C. 78c(f).

148 15 U.S.C. 80a-2(c).

149 We discuss efficiency-related issues in Section IV.

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SEC Offers Incentives for Companies to File Financial Reports with InteractiveData

FOR IMMEDIATE RELEASE2006-7

Washington, D.C., Jan. 11, 2006—The Chairman of the U.S. Securities and Exchange Commis-sion today announced that the Commission staff will offer expedited reviews of registrationstatements and annual reports to companies that volunteer for a test group as part of the Com-mission’s interactive data initiative. Interactive data holds the promise of transforming the static,text-only documents companies file with the SEC into dynamic financial reports that can bequickly and easily accessed and analyzed.

SEC Chairman Christopher Cox said, “The best way for filers to understand how interactivedata works is to participate in the voluntary program. The filers will have an opportunity toshare with the SEC their individual experiences with preparing, making and analyzing theirinteractive filings. They will also better understand how interactive data can help streamline theirfinancial reporting process.”

In April 2005, the Commission began a voluntary program for receiving financial informationusing eXtensible Business Reporting Language (XBRL)—a computer language that makes finan-cial data interactive. This program allows for the voluntary submission of XBRL documents asexhibits to periodic reports from corporate issuers and Investment Company Act reports.

Companies that participate in the voluntary program’s new test group will furnish financial datacontained in their periodic and investment company reports in XBRL format for at least one yearand provide feedback on their experiences, including the costs and benefits associated withreporting in the interactive data format. Because of the efficiencies staff anticipates in reviewingtheir filings prepared in XBRL and to encourage participation in the test group, the Commissionstaff will offer volunteers expedited reviews of registration statements under the Securities Act of1933 that the staff has selected for review. For well-known seasoned issuers, the Division ofCorporation Finance staff will offer to inform volunteers whether or not the staff will select theirannual reports on Form 10-K for review. The staff will notify each well-known seasoned issuervolunteer whether it will select the volunteer’s Form 10-K for review within 30 days after filingand will undertake to provide any comments on that filing within 45-60 days of filing.

The Commission staff is seeking test group participants that will use the commercial andindustrial, banking, insurance, or investment management industry classifications in XBRL.Companies interested in participating in the test group should contact Jeffrey Naumann in theOffice of the Chief Accountant (naumannj@sec.gov) or Brigitte Lippmann in the Division ofCorporation Finance (lippmannb@sec.gov) by Feb. 10, 2006, for more information. The staffexpects to have the group set by some time in February.

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SEC Extends Deadline for Companies to Join Interactive Data Test Group

FOR IMMEDIATE RELEASE2006-20

Washington, D.C., Feb. 13, 2006—The staff of the U.S. Securities and Exchange Commissiontoday announced that the deadline for companies to join the Commission’s Interactive data testgroup has been extended until March 10, 2006, in response to requests for more time frompotential participants.

Since it was first announced January 11, several companies have already signed up to participatein the test group. The extension responds to numerous requests from the filing community foradditional time for filers and service providers to investigate and prepare for participation. Thefour-week extension also recognizes the demands of year end reporting requirements.

Under the test program, Commission staff will offer expedited reviews of registration statementsor annual reports to registrants that participate in the test group as part of the Commission’sinteractive data initiative. Interactive data holds the promise of transforming the static, text-onlydocuments companies file with the SEC into dynamic financial reports that can be quickly andeasily accessed and analyzed.

Companies interested in participating in the test group have until March 10, 2006, to contactJeffrey Naumann in the Office of the Chief Accountant (naumannj@sec.gov) or Brigitte Lipp-mann in the Division of Corporation Finance (lippmannb@sec.gov).

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Financial Reporting in the XBRL Age:A Step-by-Step XBRL Implementation

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Executive Report October 2005

Financial Reporting in the XBRL Age:A Step-by-Step XBRL Implementation

PurposeThe purpose of this paper is to explain how the eXtensible Business ReportingLanguage (XBRL) can be used to improve internal and external financial reportingand where XBRL is in its adoption evolution. To move XBRL to broad adoption,participation and input from finance executives in every part of the financialreporting chain and every industry is required. For financial statement preparers, oneway to participate is through the Securities and Exchange Commission’s (SEC)voluntary XBRL filing program. This report concludes with a step-by-step approachfor first-time implementation of the SEC’s program.

Introduction

“I used to think that cyberspace was 50 years away. What I thought was 50 years away, wasonly 10 years away. And what I thought was 10 years away... it was already

here. I just wasn’t aware of it yet.”

Bruce Sterling, science fiction author

Just as cyberspace crept up on Mr. Sterling, eXtensible Business Reporting Language (XBRL) iscreeping up on the world of finance. It is not 10 years away. Instead, it has arrived,unbeknownst to many financial executives, and it will change the way financial information isreported in the U.S. and around the world. Because XBRL is still in the early adoption phase,financial executives have the chance to shape the future by participating in XBRL’s developmentnow.

XBRL is not technology, but a set of standards, called taxonomies, built using the eXtensibleMarkup Language (XML). Like accounting standards that direct financial executives how toaccount for and report business transactions and financial information, XBRL directs executiveshow to report financial information in the electronic age so that all constituents accessing thedata understand the information they are getting. It does not replace or affect the system ofaccounting standards, it enables computer translation of financial information that can beinterpreted by any XBRL enabled user, essentially “bar coding” for financial information.

Financial executives face constant pressure to build a finance function that adds value by provid-ing meaningful information to enable good business decisions. To accomplish this goal, financepersonnel must spend less time keying data and more time analyzing it. Most financial analysisstill uses spreadsheet programs into which the relevant financial information must be keyed.XBRL has the potential to make re-keying of data an activity of the past.

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In addition to internal reporting pressures, external reporting pressures have been at the top ofthe agenda over the last several years. Legislation like the Sarbanes-Oxley Act of 2002 and otherlaws aimed at eliminating conflicts of interest in the investment analyst industry, are forcingcompanies to change how and what they report to investors.

With regulatory and internal pressures forcing changes to the existing financial reporting models,XBRL is emerging as an answer in the U.S. and around the globe. XBRL is a collaborative stan-dard that requires input from industries and users of financial statements. Participation in theSEC’s voluntary filing program is a possible introduction for those not familiar with the stan-dard and provides the opportunity to use and improve the standards.

For those executives willing to commit time to XBRL, the impact to business reporting improve-ments could be great. External and internal reporting with XBRL allows for easier access by awider range of stakeholders. Participation in XBRL today affords the rare opportunity to shapethe future by working with software vendors, XBRL International, the consortium of approx-imately 300 companies and agencies worldwide that develop the standards, analysts and otherstakeholders who are actively involved in the next stage in XBRL development.

XBRL’s Adoption Evolution

In spite of attempts over the last several years to educate the financial community, according to a2005 survey by Computer Sciences Corporation and Financial Executives Research Foundation,over 70% of financial executives have little or no knowledge about the standard. Like any newstandard or technology, XBRL must pass through the various stages of an adoption curve. Thefirst stage is characterized by small groups of users defined as enthusiasts and visionaries. Crit-ical mass is achieved in the next stage, characterized by users defined as pragmatists.1

XBRL is still in the early stages of the adoption curve. XBRL International, the consortium thatdevelops the standards, began work in 1998 and continues today to expand the standards andtaxonomies to meet the needs of businesses worldwide. The U.S. jurisdiction of XBRL, with over300 organization members, including Financial Executives International (FEI) and the AmericanInstitute of Certified Public Accountants (AICPA), has released approved standards that can beused by over 90% of US companies. Software companies are developing progressively betterXBRL products and are integrating XBRL into existing products, but many current programslack the ease of use necessary to bring XBRL into mainstream adoption. Several key events overthe past few years have provided the impetus to bring XBRL along—the enactment of theSarbanes-Oxley Act of 2002 and the shakeup in the investment analyst industry that is changinghow and which companies are analyzed for investors.

External Reporting and XBRL

Many investors consider investment analyst coverage essential for making informed decisionsregarding their portfolio, but the analyst industry has undergone significant changes in the past

1 “Crossing the Chasm” by Geoffrey A. Moore 1991

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several years. In 2002, the SEC and the New York Attorney General began separate proceedingsto eliminate conflicts of interest in the investment analyst industry. The results have created sig-nificant changes in the way analysis is performed, and has added to the cost of producing it.Two cost reduction measures taken by the industry were expanded use of data aggregators fordata collection and a reduction in the number of companies covered.

Data aggregators, an industry developed around the re-keying of public company financialinformation and making the data available to third party users, have a significant impact on thefinancial reporting chain, which begins with the company and ends with the investor. Thecompany’s financial executives prepare and submit quarterly and annual financial reports, andother regulatory disclosures, to the SEC. Once submitted, the SEC makes the information pub-licly available. The available information is obtained by data aggregators that tag data accordingto their own standards, and then sell the data to investment analysts. Investment analysts pre-pare their reports with this data and then provide the reports to investors.

Data aggregators use a software program called a parsing tool that automatically tags financialinformation based upon parameters set up in the software. For standard items, parsing toolsprovide efficient and effective information. However, for non-standard items—which are oftencritical to how investors view a company’s results—the data aggregator must decide on classi-fication. Their classifications may not represent what the company had originally intended byproviding the detail.

With XBRL, the role of data aggregators may be affected because information received andstored by the SEC and provided to other sources is tagged by the company. If the analyst is usingan-XBRL enabled software program, they can receive tagged data from the company’s filingswith the SEC and analyze as needed.

Another key piece of the puzzle that is often missed using aggregator information is the detailedfootnote information.” The average parsing tool used by aggregators has about 300 standardelements, while the average set of financial statements and notes has about 3,000,” said MikeWillis, Partner with PricewaterhouseCoopers LLC.

With XBRL, while one company may classify items differently than another company, an analystcan easily compare the two based on common tagging. For example, “work in processinventory” may be on the face of the balance sheet, or disclosed in the footnotes, depending onthe company. Using XBRL, it would be tagged as “work in process inventory,” regardless ofwhere it is reported. XBRL creates more consistency among users of financial information, nomatter where they retrieve their data.

For financial executives at small and medium sized public entities (SME’s), the current externalreporting structure creates other problems. Instead of having a message delivered to investors,coverage may currently be nonexistent. Cost cutting measures in the industry have reduced thenumber of companies covered by some Wall Street firms as much as 18% from 2000 to 2003.Small business executives argue that no coverage, translates into a permanent discount on thestock price. Many analysts agree with this negative outcome.

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“The number of companies under (investment analyst) coverage shrunk as an unintended con-sequence of the “Global Research Settlement” between the New York Attorney General, theSEC, and some eleven investment banks.2 The smaller public companies with less liquidity werethe worst hit in the almost immediate reduction of coverage, a kind of investment class“cleansing,” creating hundreds, if not thousands, of “research orphans,” writes Gayle Essary,managing director of Investrend Research, in a 2005 comment letter to the SEC.

Dwindling coverage by Wall Street firms in 2003 versus 2000 is captured in Figure 1:

Figure 1. Coverage Shrinks on Wall Street

Public Companies Covered

Firm 2000 2003

• Merrill Lynch 3,500 2,469• CSFB 3,077 2,373• Smith Barney 3,000 2,300• J.P. Morgan Chase 2,400 2,260• Goldman Sachs 2,315 1,950• Morgan Stanley 2,150 1,925• Lehman Brothers 1,650 1,605

Source: The Wall Street Journal

Such “research orphans” often believe that their stock price is undervalued according to theirfinancial executives. “If you talk to CEOs at most small companies, they invariably claim theircompany’s stock price has a sort of permanent discount due to lack of analyst coverage. Mostsmall companies, even more than they want a higher stock price, want more liquidity in theirstock,” says David Harper, editor-in-chief of the monthly newsletter Investopedia Advisor andinvestment analyst for Harbinger Research.

The process of research is expensive though. Prior to the Global Research Settlement, the stan-dard practice was investment banks, by far the largest employer of investment analysts, bundledresearch with profitable services like underwriting and trading. Now that the bundled model isno longer acceptable, the business community is trying to figure out who will pay for priceyresearch services, the company or the investor. The dilemma is lessened by XBRL because thetechnology makes the process of analyzing financial information more accurate, more efficientand less expensive.

2 On April 28, 2003, the Securities and Exchange Commission (SEC), the National Associationof Securities Dealers (NASD), the New York Stock Exchange (NYSE), New York State AttorneyGeneral Eliot Spitzer and other state regulators announced a final $1.4 billion settlement agree-ment reached with 10 Wall Street firms in their investigation into Wall Street conflicts of inter-est. Along with the monetary settlement, the firms agreed to make significant structural changesdesigned to insulate their research departments from their investment banking departments.

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“Turning to the Small Market Enterprise space of inefficient exchanges like Over-the-Counter(OTC) Bulletin Board (BB), I believe the (XBRL) cost savings for analysts that venture into thisarena would be immense. For example, the Microsoft Office Tool for XBRL Prototype is ademonstration of how you can easily create or analyze XBRL documents directly from withinMicrosoft Office Excel 2003. For investment analysts, this prototype is a useful tool to quicklyanalyze data without the need to reenter or manipulate data,” explains Kipley J. Lytel, SeniorPartner with Montecito Capital Management, a Santa Barbara, CA based financial managementfirm, and senior analyst for Investrend Research.

Mr. Harper explains, “When I write-up a company report, crunching numbers and generatinggraphs occupies at least 50% of my time. What is so compelling about XBRL is that it canautomate, in real-time, much of that number crunching. Therefore, I expect to reduce the time ittakes to analyze a company by about 50% just by using XBRL-enabled tools. And that is beforewe talk about some of the long-term potential to add value with the automatic error-checkingand quasi-intelligence.”

Internal Reporting and XBRL

While external transparency of financial information is valuable to many, there is also significantpotential to use XBRL internally. “XBRL can become a valuable element in complying with theSarbanes-Oxley Act-specifically, management assessment of internal controls (Section 404) andreal-time reporting requirements of Section 409,” says Mr. Lytel.

Companies are spending a large amount of money to certify the effectiveness of their internalcontrols and have begun looking for efficiencies that will provide increased assurance at a lowercost. The next generation of internal control tools will easily connect through XBRL into thebusiness and financial systems of a company, creating an ability to monitor the effectiveness ofinternal controls through tight linkage of the “control system” to the business/accounting sys-tems.

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Figure 2. The future of integration across business and accounting systems.

An example of how XBRL can seamlessly incorporate the control system with the financial sys-tem is when a particular control is over-ridden. An approval or notification can be routed to theappropriate manager or executive. If a control activity has deficiencies that need correction oradditional controls to mitigate risk, the tracking and linkage of the issue from identificationthrough resolution can be easily reported. Companies can also tightly link policies and proce-dures to their control activities.

With XBRL, software developers can build tools that can be installed into a wide variety of sys-tems, without the need to customize the interface to the company. Installation may require cus-tom configuration based on how a company will want to deploy its internal control systems,however, that would likely be at a much lower cost. Additionally, because XBRL is an externalstandard that supports financial reporting based on U.S. generally accepted accounting principles(GAAP) and International Financial Reporting Standards (IFRS), companies will have the abilityto respond to rapid changes in regulatory reporting requirements.

The ability to consolidate acquisitions and integrate business systems has historically been chal-lenging due to differences in data and account structures. XBRL has the potential to significantlyreduce the time and effort required to integrate new acquisitions if both companies are using the

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standard. Integration would simply be a matter of consistently classifying the already taggedinformation. There would be little need for a large information gathering and consolidationeffort that exists with acquisitions today.

Taking XBRL to the Next Level

The benefits of XBRL for financial reporting, as have been described, are likely the tip of theiceberg. The XBRL financial reporting structure will be more fluid and have fewer opportunitiesfor error, reduce the costs of preparation and enable quicker reporting. To achieve the XBRLmodel requires participation by financial executives from all areas including, preparers, analysts,auditors and regulators.

New products using XBRL have been introduced that make the analyst’s and auditor’s job muchless labor intensive and less dependent on data aggregators. Developing a spreadsheet to modelfinancial information is as easy as inputting the desired company’s ticker symbol. For regulatorswho receive financial information in an XBRL format, standards tests, like checking bank capitalrequirements, can be performed in seconds upon receipt of the data from the bank.

For preparers in public companies, one way to participate in using XBRL is through the SEC’svoluntary XBRL filing program. The remainder of this report is dedicated to educating thereader on the specifics of XBRL and providing an implementation plan for participation in theSEC’s program.

What’s in a Number? The Specifics of XBRL

XBRL is a specific schema for financial reporting based on XML that enables software to under-stand the content of financial reporting, the “what” (for example, the rows—line item descrip-tion, number or value—and columns, the period or duration contexts) when a financial state-ment is submitted.

Today when analysts want to get at the data, they interpret the line items and re-key the data.XBRL allows each of the line items, their values and the specific columnar definitions to berepresented as XML data so that software can easily analyze. This is accomplished through theeffort of “tagging” a document with XBRL tags.

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An XBRL Item—

For financial reporting, the atomic level of reporting is an element, whereby each element has asingle relationship to an accounting concept. In XBRL, that element is represented by an XBRLitem.

Labels—For every concept within the XBRL taxonomy, there are unique standard labels. Anexample of a standard label is “Contingencies-Litigation.”

References—References are the link to authoritative literature supporting the concept and relatedaccounting reference where it is defined. For example, the reference for “Contingencies-Litigation” is “FASB Statement of Financial Accounting Standard (FAS) 5, http://www.fasb.org/pdf/fas5.pdf, 2004-08-01”

Presentation—Presentation is the order of elements, which makes it easy for users to find specificcontent within the XBRL taxonomy.

Calculation—The calculation defines how an element relates to another element in terms ofcalculations. (I.e. Net Revenue less Cost of Goods Sold equals Gross Margin).

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Context or Definition—Indicates for each element whether it is a special case of some otherdefined concept.

Formulas—Formula supports company-specific calculations or business rules.

XBRL Financial Reporting Taxonomies Architecture-

In order for XBRL to span the breadth of industries and financial reporting needs of U.S. busi-ness, a working group in the U.S. jurisdiction of XBRL International, called the Domain Work-ing Group, has focused on representing U.S. GAAP in XBRL taxonomies. To provide guidanceto users for building valid taxonomies and extensions, that group also authored the FinancialReporting Taxonomies Architecture (FRTA). The result of these combined efforts was a catego-rized set of taxonomies that, used in combination, express complete financial reports of bothpublic and private companies across many industry sectors.

There are three categorizations of taxonomies in the framework:

• Stand Alone Add-ons. The stand alone add-ons are optional taxonomies that can beused by preparers to include in tagged financial statement filings. Common terms arefoundational building blocks that enable industry specific taxonomies. These taxonomiesinclude elements that are common, which ease maintenance and enable comparabilityacross similar industries.

• Industry-specific. Industry specific taxonomies include the specialized concepts asso-ciated with a specific industry. Companies filing their financial statements in XBRL willselect an industry specific taxonomy as a starting point, prior to any company specificextensions.

• Company Extensions. These are elements specific to a company not found in the standalone or industry specific taxonomies.

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Figure 3. XBRL taxonomies: A collection of extensible, modularized taxonomies.

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The output of “tagging” a company’s financial statements in XBRL is an instance document, anXML file type. An instance document is readable by software programs; they require access tothe taxonomies used above. In fact, the instance document declares the Internet or Web locations(references) where the program can access the specific taxonomies used in the instance docu-ment. Therefore, a company filing in XBRL will need to make available their specific taxonomiesif modified or extended.

An XBRL Implementation; Step-by- Step Project Plan

The SEC’s final rule “XBRL Voluntary Financial Reporting Program on the EDGAR System”(http://www.sec.gov/rules/final/33-8529.htm) was effective on March 16, 2005. For those whodecide to begin working with XBRL, participation in the SEC’s Voluntary Filing Program is anatural starting point. Below is a flowchart that outlines all of the steps necessary for an initialimplementation.

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Step 1—Identify a team: Accountant and XML Developer

Two functional skill sets are required to begin the project:

• An accountant who is proficient in supporting technical accounting requirements to:

• Match GAAP concepts used in the financial statements to supporting elements in theXBRL taxonomy,

• Identify gaps in financial statements and define new elements if necessary,

• Assist in quality assurance process to ensure correct tags are applied to financialstatement data.

• A developer with a good working understanding of XML to:

• Evaluate, install and test appropriate XBRL tools, to tag the financial statements andto produce a file called the instance document,

• Create company-specific taxonomy extensions,

• Ensure that valid XML and XBRL are created, including identification of predictableerrors. An example of a predictable error is a calculation error based on differencesin a company’s financial statements and those expected in the XBRL taxonomy.

Step 2—Assess Scope of Reporting and Determine Taxonomy

The SEC’s final rule allows for latitude in the level of detail a company can decide to provide inXBRL. The first decision a project team must make is which SEC form to initiate their partic-ipation in the filing program (10-Q, 10-K, etc.). Obviously, the form must coincide with projecttiming. Once the form is decided, the team must assess and determine the level of detail to tagand furnish with filed financial statements. With the recent specification, there are taxonomiesavailable for filing the financial statements, the SEC certification, the management report, theaccountants report and the Management Discussion and Analysis.

The SEC requires filers to use the appropriate version of a standard taxonomy, supplementedwith extension taxonomies as specified by the EDGAR Filer Manual. Currently, there are fourextension taxonomies in the EDGAR Filer Manual including,

• Commercial and Industrial

• Banking and Savings Institutions

• Insurance

• Investment Companies.

However, the Commercial and Industrial Taxonomy (GAAP C&I) will cover a majority of U.S.public companies. Some companies may not be able to participate in the voluntary filing pro-gram due to lack of specialized taxonomies required for their respective industries (Oil & Gas,for example).

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Registrants choosing to file in XBRL are still required to submit their filing in ASCII or HTML.The XBRL filing does not replace the current filing method. Volunteers can choose to file only aportion of their filing in XBRL according to the SEC rules on Mandatory Content and OptionalContent. The following is an excerpt from the SEC ruling:

Mandatory Content consists of a complete set of information for all periods presented in thecorresponding official EDGAR filing from one or more of the following categories (as filed in thecorresponding official EDGAR filing):

• the complete set of financial statements (the only exceptions are that notes to the financialstatements and schedules related to the financial statements may be omitted unless thevolunteer is a registered management investment company, in which case it must includeSchedule I – Investments in Securities of Unaffiliated Issuers);

• earnings information set forth in Form 6-K or Items 2.02 or 8.01 of Form 8-K (whethercontained in the body of the Form 8-K or Form 6-K or in an exhibit, and whether filed orfurnished); or

• financial highlights or condensed financial information (if the volunteer is a registeredmanagement investment company).

Optional Content can consist only of a complete set of information that is:

• for all periods presented in the corresponding official EDGAR filing;

• related to financial information in the corresponding official EDGAR filing that issimultaneously submitted as Mandatory Content; and from one or more of the followingcategories (as filed in the corresponding official EDGAR filing):

• audit opinions;

• interim review reports;

• reports of management on the financial statements;

• certifications; or

• Management’s Discussion and Analysis of Financial Condition and Results of Oper-ations (“MD&A”), Management’s Discussion and Analysis or Plan of Operation,Operating and Financial Review and Prospects or Management’s Discussion of FundPerformance (“MDFP”).

Step 3—Compare and Map 10-K/10-Q to Taxonomies

The project team will review the original filing item-by-item, starting with the financial state-ments and then working through notes and management’s discussion and analysis. The projectteam can use the “presentation taxonomy” in the industry taxonomy most closely aligned with

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their company. The organization of the presentation taxonomy is most familiar to financialexecutives because it is organized by financial statement line. The presentation taxonomy forcommercial and industrial business is located at: www.xbrl.org/. A taxonomy editing tool or aninstance document authoring tool are both appropriate for completing this step.

Carefully document which XBRL elements refer to which line items, noting exceptions, gaps,and questions. Assessing the content of the XBRL taxonomy, such as US GAAP C&I requiresreviewing all elements in the taxonomy, how the presentation language reads, calculations, anddefinitions, including the authoritative references. Assessing, mapping and identifying gaps areprerequisite activities to extending the primary taxonomies.

Step 4—Extend the Taxonomy As Necessary

Once you have compared your 10-K or 10-Q to the presentation taxonomy and have determinedthat the taxonomy does need to be extended, a software program to extend the taxonomies isrequired. While the taxonomy can be edited and extended using a number of XML editing tools,we recommend using an evaluation copy of an available XBRL-specific tool to determine whichare most usable and best fit your needs. Currently, there are a number of software choices thathave varying degrees of functionality and ability to extend taxonomies.

Some questions to consider:

• Does the presentation of the XBRL element match what my company calls the item?

• If not, does this require just a modification of the label or is this a new item? Here iswhere the technical accountant must recognize how the company reports and map toXBRL element.

• Do my notes and MD&A require extensions to the taxonomies?

• What parts of my financial reporting require additional context definitions (see “Creatingan Instance Document” below)? For example, using segments as part of contexts requirescreating the specific extensions to describe your companies segments (business units,products, and so forth).

• To what extent does a new element require calculation modifications?

Step 5—Create an Instance Document and Validate Calculations

Creating an instance document requires “authoring” software, a tool that allows the user toeither associate relevant data to the specific taxonomy elements used in the company’s financialstatements, or one that allows you to mark-up or tag another file format (such as MicrosoftWord or Excel) with XBRL taxonomy elements. The latter focuses on the user scenario in whichthe primary financial statements are authored or assembled in Word or Excel.

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For many companies, working in Word and Excel likely matches the business process of internaland external reporting. Both application types should include the feature of exporting the finan-cial reporting data to XML – the specific organization and structure to the XML document is theinstance document.

Other considerations on software selection include:

• Does the software have adequate, good or superb documentation? Does the doc-umentation describe not only the functionality but also how to create an instance docu-ment step-by-step?

• What kinds of support does the software vendor have? Can you easily find a list ofknown issues? Has the vendor documented common troubleshooting steps?

• Software integration: Does the software install and uninstall seamlessly? Does the applica-tion cause any other performance issues or other degrading effects on your computer orwith other software?

• What kind of pre-installation components or other software does the application require?Are these publicly available, and allowed in your desktop environment?

Step 6—Review and Validate Instance Document

A few software vendors specializing in XBRL have developed instance document validation toolswhich are useful in conjunction with your instance document to validate the XML and XBRLstructure. As part of the project of authoring an instance document for your company’s 10-Q or10-K, identify several milestones to validate the tagging process and output, such as testing a fewitems, finishing the income statements, or combining two or more statements. After completingthe instance document you should conduct a process of validation, followed by quality assurancereview prior to publishing.

Validation ensures that taxonomies are accessible and that software can find them. Validationtools also perform other routines to check that:

• Elements are fully defined, including calculations, definitions, and so forth,

• GAAP expected calculations resolve or ensure: the balance sheet balances, the incomestatement ties to the balance sheet and the cash flow agree for each specific item that canbe reconciled to the balance sheet,

• Any company-specific extensions that involve calculations are also resolved,

• The XBRL instance document is well formed. For example, the instance document specifi-cation does not allow an element + context combination more than once: each must beunique. (In the example above, this forces the design of various contexts to describerevenue.)

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XBRL International created the Financial Reporting Instance Specification (FRIS) so that soft-ware application vendors can implement validation routines for authoring instance documents.As a user, you do not need to review the FRIS, however, the accountant working along side theIT resource will potentially need to address validation errors.

A few things to consider:

• The SEC has modified the EDGAR system to accept native XML and XSD (XML sche-ma) files; however these must contain only ASCII text.

• If you work with a financial publisher, they will likely use a Uuencode tool to transformthe files and its characters.

• Because instance document authoring applications are relatively new, in the scenario oftagging Word files, rich text must be converted to ASCII text, and sometimes the XMLoutput will convert seemingly simple characters to HTML. For example, “&” becomes“&” and may look like gibberish.

• Because the industry lacks tools to easily render the XML in an instance doc back into aMicrosoft Word document, you may want to edit the XBRL body text in notes andMD&A, removing the HTML.

• XML editors still recognize non-ASCII characters such as non-breaking white spaces,em-dashes (the longer form of a dash) and these will be rejected by the EDGAR system.

• These considerations apply to XBRL taxonomy editing tools as well, as the submissionprocess includes company-specific taxonomies.

After technical validation of the instance document, a quality assurance review is necessary toensure that the XBRL element, the context definitions, and the tagging correctly describe thefinancial data. The quality assurance process today will require reading through the instancedocument in XML. Once completed and all parties have signed off on the document, publicationis the next and final step.

Step 7—Publish the Instance Documents & Taxonomy

In the SEC’s voluntary program, instance documents are furnished along with the taxonomiesand necessary files to complete a schema. The same effort will be required to publish on a com-pany Website to ensure that all information furnished to the SEC is also available to share-holders. Submitting XBRL versions of a 10-K or 10-Q does not need to take place simulta-neously with the financial statement filings. The final rule establishing the voluntary programstates:

“The XBRL-Related Documents may be submitted at the same time as the officialEDGAR filing to which they relate, either as an exhibit to the official filing or, foroperating companies, as an exhibit to a Form 8-K or Form 6-K47 filedsimultaneously. Alternatively, the XBRL-Related Documents may be filed subsequent

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to the official EDGAR filing to which they relate, either in a later amendment to theofficial filing or, for operating companies, as an exhibit on Form 8-K or Form 6-K.Volunteers will not be permitted to submit the XBRL-Related Documents before theyfile the related official document. Although the amendments do not establish adeadline for submitting or amending XBRL data, volunteers are encouraged tosubmit the XBRL-Related Documents with the official document or shortly after theofficial document are filed. Volunteers will be free to submit their XBRL exhibitsregularly or from time to time and can stop or start as they choose. If a volunteeramends the XBRL-Related Documents it submitted earlier, it should amend the filingto which the XBRL-Related Documents are attached as an exhibit.”

For more details on the XBRL submission process, you should refer to the EDGAR filing man-ual, Appendix L (http://www.sec.gov/info/edgar/edmanuals810.htm). If you work with a finan-cial publisher, then they will need this reference.

Conclusion

Support for XBRL continues to grow nationally and internationally. Projects like the SEC’sVoluntary Filing program and the Federal Deposit Insurance Corporation’s (FDIC) project to useXBRL for bank call report filings, due for launch on October 1, 2005, have led U.S. financialexecutives to take notice and get involved. Executives abroad face the same pressure as govern-ment agencies jump onto the bandwagon. In the United Kingdom, plans were announced “toenable filing of Corporation Tax using XBRL in 2006. Japan’s Financial Services Agency alsosaid it will introduce the use of XBRL for financial statements by fiscal 2008.”3

A unique opportunity is available for financial executives who want to take part in shapingXBRL. By understanding and implementing XBRL today, participants provide valuable feedbackto XBRL International for building the standards, as well as to software vendors for developingproducts that make implementation more efficient. Today we are on the verge of a new era infinancial reporting that will make the process more efficient.

3 “Latest News About XBRL,” XBRL.org

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About the Authors

This report was authored by Taylor Hawes and Tiffany McCann. Mr. Hawes is chair of FEI’sCommittee on Finance and Information Technology (CFIT), and Controller-Global Platforms &Operations at Microsoft Corporation. Ms. McCann is a freelance writer who follows emergingtechnologies in finance and accounting.

The authors would like to thank CFIT & Michael Ohata, Director of Reporting Standards atMicrosoft Corporation, for their review and input.

About FEI’s Committee on Finance and Information Technology

FEI’s Committee on Finance and Information Technology (CFIT) addresses the needs and inter-ests of financial executives in the area of e-business technology and information management.This includes, but is not limited to, the development and application of information technology,systems and other methodologies affecting the management of business functions and inter-actions with customers, suppliers, and investors. The general function of CFIT encompassesresearch, studies or surveys, the annual FEI Technology Forum and the dissemination of knowl-edge.

CFIT monitors information, trends, and developments from the perspective of the financialexecutive as: a member of management interested in the use of information for performanceanalysis and decision support and for e-business; the provider auditor for controls, security andreliability of information; and the administrator responsible for providing, processing anddisseminating information.

CFIT has the responsibility to: represent the views, attitudes and opinions of the FEI member-ship; maintain high standards of professional integrity and technical competence; and inform andstimulate the membership interests in the use and management of technology in finance andbusiness functions.

About Financial Executives Research Foundation, Inc.

Financial Executives Research Foundation, Inc. (FERF) is the non-profit 501(c)(3) research affili-ate of FEI. FERF researchers identify key financial issues and develop impartial, timely researchreports for FEI members and non-members alike, in a variety of publication formats. FERF reliesprimarily on voluntary tax-deductible contributions from corporations and individuals.

The views set forth in this publication are those of the author and do not necessarily representthose of the FERF Board as a whole, individual trustees, employees, or the members of theResearch Advisory Council. FERF shall be held harmless against any claims, demands, suits,damages, injuries, costs, or expenses of any kind or nature whatsoever except such liabilities asmay result solely from misconduct or improper performance by the FERF or any of itsrepresentatives.

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Financial Executives Research Foundation, Inc. http://www.ferf.org200 Campus DriveFlorham Park, New Jersey 07932

Copyright © 2005 by Financial Executives Research Foundation, Inc.All rights reserved. No part of this publication may be reproduced in any form or by any meanswithout written permission from the publisher.International Standard Book Number 1-933130-17-2Printed in the United States of AmericaFirst PrintingAuthorization to photocopy items for internal or personal use, or the internal or personal use ofspecific clients, is granted by Financial Executives Research Foundation, Inc. provided that anappropriate fee is paid to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA01923. Fee inquiries can be directed to Copyright Clearance Center at 978-750-8400. For fur-ther information please check Copyright Clearance Center online at http://www.copyright.com.

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Gartner Industry Research

Publication Date: 1 December 2005 ID Number: G00135713

EDGAR Online Provides New Investment AnalysisCapabilities With XBRL-Tagged Data

Mary Knox

Extensible Business Reporting Language (XBRL) can improve the quality and efficiency ofinvestment analysis. What has been missing is XBRL-tagged data for analysis. EDGAR Online’s(EOL’s) I-Metrix is overcoming this dilemma for corporate financial and operational data(referred to as fundamental data), beginning with U.S. Securities and Exchange Commission(SEC) filing data for 5,000 U.S. companies. I-Metrix is important as an individual product offer-ing and as a general stimulator of XBRL adoption and maturity.

Key Findings

• XBRL has the potential to improve the quality and reduce the cost of investment analysis.

• A lack of XBRL-tagged performance data has hindered the achievement of this potential.

• EOL’s I-Metrix provides a source of XBRL-tagged fundamental data, overcoming thishindrance.

• EOL’s first-to-market advantage must be cemented with continued development of high-quality, value-add enhancements.

Prediction

• Through application of XBRL, I-Metrix will produce a minimum of a 25 percent effi-ciency gain in fundamental data analysis for companies using proprietary, non-ExtensibleMarkup Language (XML)-based fundamental data sources.

Recommendations

• Investment services companies should evaluate I-Metrix for automating access and manip-ulation of fundamental data from SEC filings.

• Business intelligence (BI) tool vendors should consider how XBRL-tagged data can beleveraged in their current or potential products.

© 2005 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form withoutprior written permission is forbidden. The information contained herein has been obtained from sources believed to bereliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. AlthoughGartner’s research may discuss legal issues related to the information technology business, Gartner does not provide legaladvice or services and its research should not be construed or used as such. Gartner shall have no liability for errors,omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressedherein are subject to change without notice.

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ANALYSIS

Overview

I-Metrix is EOL’s response to a need to automate the analysis of corporate performance data.Introduced in April 2005, I-Metrix offers online access to XBRL-tagged SEC filing data, includ-ing importation into Microsoft Excel. Analytical templates are also provided.

Relationship to Investment Industry Enterprise Nervous System Requirements

Industry-standard, format-independent fundamental data enables investment services companiesto use a single source of data across multiple applications and avoid lock-in to a specific datasupplier. It also improves data quality and immediacy of access and use by removing time-consuming, error-prone manual data entry and manipulation for spreadsheet analysis.

Analysis

Company Background

EOL, founded in 1994, provides financial information from SEC filings and related analyticaltools through online subscriptions. EOL is based in Norwalk, Connecticut, with offices in NewYork and Rockville, Maryland. It has 95 employees and market capitalization of approximately$56 million.

In 3Q05, EOL had a net loss of $1.5 million, compared to a net loss in 3Q04 of $720,000. Theincrease is largely attributed to I-Metrix development and launch costs. In contrast, revenue of$10.6 million for the nine months ending 30 September 2005 represents a 10 percent increasefrom the same period of a year earlier and includes an 18 percent increase in subscription value,EOL’s core business. Although I-Metrix only contributed marginally to EOL revenue due to itsinitial introduction in April, it has achieved sales of more than $200,000 in annual contractvalue.

Product Description

I-Metrix provides access to XBRL-tagged SEC filing data within a maximum of 24 hours, andoften within minutes, of the company filing with the SEC. The data is delivered online withaccess through Microsoft Excel, a Web site, a visualization dashboard or a direct data feed.Users can click on individual XBRL-tagged data elements in the Excel worksheet and be taken tothe underlying SEC filing document for immediate verification. Standardized, customizable tem-plates that allow analysts without explicit XBRL knowledge to work with the data are provided.There are also Excel wizards for requesting different data types and creating templates andmodels.

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There are three I-Metrix offerings:

• I-Metrix Professional: Online provision of XBRL-tagged data

• I-Metrix Architect: Provision of a Web service component for distribution of I-Metrix-supplied and derived data internally or to external customers

• I-Metrix Customization Services: Fee-based provision of services to answer complex finan-cial questions and create custom templates and models

I-Metrix Professional comes in three editions:

• Analyst: For investment services, banking and insurance analysts evaluating corporateperformance for investment or credit decision making. It includes approximately 15 tem-plates for valuation, discounted cash flow, peer analysis, growth analysis and anomalydetection.

• Corporate: To support corporate finance, strategic planning and competitive intelligenceactivities. It includes approximately 10 templates for benchmark analysis, company over-view and forensic analysis.

• Auditor: For auditors, with templates similar to the corporate edition.

EOL has XBRL-tagged the line items in SEC 10K, 10K/A, 10Q, 10Q/A filings and has recentlyintroduced 8K earning releases for approximately 5,000 companies, including all with a marketcapitalization of at least $100 million that are covered by four XBRL taxonomies:

• Commercial and industrial (approximately 1,200 data elements)

• Banks (approximately 900 data elements)

• Insurance (approximately 900 data elements)

• Real estate (approximately 1,000 data elements)

Also, I-Metrix has approximately 75 summary data elements for all publicly traded U.S. compa-nies. Annual and quarterly data is available from 1998 onward for all covered companies. Notpresently XBRL-tagged, footnotes can be viewed as text and footnote tables downloaded intoExcel.

Data is delivered in various formats including: 1) as reported; 2) as reported, but with U.S. gen-erally accepted accounting principles (GAAP)-based calculations performed for missing fieldsthat represent calculations based on other reported fields (such as total revenue or net income);and 3) as reported for noncalculated fields, with all calculated fields recalculated based on U.S.GAAP for consistent comparisons across filings. The initial filing and the most recent restate-ment can be selected or compared using I-Metrix.

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EOL is actively growing I-Metrix through:

• Coverage of more XBRL taxonomies. In 4Q05, companies covered by the Oil and Gas,Utility, and Broker Dealer XBRL taxonomies are to be added. Data for all SEC-reportingAmerican Depository Receipts will be available in 2Q06.

• Inclusion of more data elements and data sources. The company is continuing to tag 8Kearning releases. It plans to begin extracting and mapping data from footnote tables to theXBRL taxonomies, and to integrate global XBRL data sets in 2006.

• More analytic templates and tools. The company is adding analytic templates for eachof the three editions, as well as working with customers to develop custom models. Earlypartnerships for analytical capability include ones with Microsoft, which has XBRL-enabled Excel, making the seamless download and manipulation of I-Metrix data in Excelpossible; Business Objects, for a reporting solution; and Theoris, for a visualization dash-board. Further development of these and other partnerships is planned.

Architecture

EOL extracts the line items (data elements) of filing documents received through an SEC ASCIIdata feed. Data elements are mapped with a proprietary rule engine to the appropriate XBRLtaxonomy. Any data element that does not have an identifiable counterpart in the taxonomy isreviewed by an analyst to determine if it is an alternative naming of an established element orwhether a new field needs to be added. XBRL linkbases (files that define relationships betweenXBRL elements) are used to validate incoming data by comparing computed figures to reportedvalues for calculated fields. Differences are checked to see if they are due to an extraction error,a reporting error (in which case the reporting company is contacted), or U.S. GAAP standardsnot being followed. Validated data is made available through a Simple Object Access Protocol(SOAP)-compliant Web services interface (see Figure 1). EOL’s server architecture is based onMicrosoft .NET using clustered application, Web and database servers—with site redundancyfor business continuity.

Client-side architecture consists of:

• Microsoft XP or 2000 (client-supplied)

• Integration with Microsoft Office (client-supplied) through an Excel XBRL plug-in

• Connection through firewall-neutral HTTP, with integrated HTTP-based security

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Figure 1. I-Metrix Architecture

Source: EDGAR Online

Pricing

Minimum three-seat licenses are approximately:

• Analyst Edition: $20,000 per year

• Corporate and Auditor Editions: $15,000 per year

Comparing favorably to other fundamental data sources, pricing is set to appeal to smallercompanies such as hedge funds that balk at higher prices, as well as to larger cost-consciousfirms.

User Experience

EOL claims more than 100 users of I-Metrix as of November 2005. Most are in the U.S., with afew in Europe and Asia.

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Gartner interviewed three I-Metrix Professional users (a small hedge fund, an investmentresearch specialist and a private investment management company, one of which receives datathrough a direct feed instead of through Excel. Interview findings of general interest:

• Labor reduction. The ability to access data directly into Excel across multiple companiesand across multiple reporting periods without manual manipulation to line up columnsand rows was cited as a major advantage. Before, significant time was spent cutting andpasting from different documents and aligning cells in Excel. One reference estimated thatthis reduced the time it took to analyze a company’s fundamental data by 50 percent,while another stated that models that took a half-hour to build could now be built in fiveminutes.

• Data availability and granularity. Access to data the day after a company files is seen asa significant benefit. Desire was expressed for additional data, such as footnote and busi-ness segment table data. EOL plans to include footnote table data in a future release.

• Data accuracy and completeness. Data quality was cited as comparing favorably to thatof other data providers. Problems noted were an occasional missing data element and apotential discrepancy in cash-flow aggregations. These problems are reportedly beingaddressed in future versions of I-Metrix. The ability to click on an Excel cell to see theunderlying source documents to verify accuracy was cited as valuable.

• Ease of installation and use. Basic PC skills were reported as sufficient for installingI-Metrix’s Excel version. Excel and fundamental data familiarity are reported pre-requisites for users. Developing custom templates and models and using the Excel wizardswere found to require knowledge of XML and XBRL taxonomies and in-depth Excelexpertise. High memory requirements of the Excel XBRL add-in may cause conflicts withother applications.

• EOL service. References reported a very low need to call on EOL services due to ease ofimplementation and use; however, when support was requested, response was rapid andknowledgeable.

Strategy and Outlook

EOL seeks differentiation in a commoditized fundamental data market by transforming from adocument-centric to an information-centric data and analytic tool supplier. Because it is basedon XML, XBRL enables this transformation by the separation of data from the report format.

I-Metrix targets three markets that EOL believes are underserved by competitors:

• Price-sensitive equity analysts at buy- and sell-side companies, including hedge funds, bycompetitively pricing a solution that also reduces in-house manual labor and technicalexpertise (and thus cost)

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• Corporate finance officers

• Auditors, by offering tools such as benchmarking that boost analysis efficiency

EOL is a charter member of the XBRL organization, and has invested in mapping SEC filing lineitems to XBRL taxonomies and developing tools for extracting and tagging fundamental data.Due to XBRL’s complexity, EOL believes it has a substantial lead over competitors (such asThompson, Reuters, Compustat and Global Securities Information [GSI]) that have yet to offerXBRL-compliant fundamental data.

To remain competitive when XBRL-tagged fundamental data becomes more-widely available —from competitors’ undertaking initiatives similar to EOL’s or from regulators requiring XBRL-compliant reporting, making XBRL-tagged data a commodity — EOL is aggressively investing indeveloping value-add analytical tools and services through in-house development and partner-ships, and in extending the depth and breadth of supplied data. IT is also involved in industryinitiatives to align U.S. and other GAAPs, and in the development of an international reportingstandard.

Strengths

• Earliness to market with an industry-standards-based product that addresses an industryneed for improved quality and efficiency of fundamental data analysis; there are nowreferenceable sites that can attest to business benefits, including significant reduction inmanual extraction and manipulation of data in preparation for analysis.

• Significant depth and breadth of data currently available and planned.

• Competitive pricing making this product attractive to small and large investment servicescompanies.

• A growing array of analytical templates and related business intelligence (BI) tools forworking with the data.

• Strong and growing partnerships, including prominent vendors (Microsoft and BusinessObjects) and niche providers.

• Industry expertise and leading-edge awareness of issues and requirements surroundingfundamental data due to involvement in industry initiatives.

Challenges

• Commoditization of XBRL-compliant data, which can be expected to occur in the future;EOL must, with its limited staff resources: 1) aggressively develop differentiating,value-add analytical and reporting capabilities and 2) develop and maintain a reputationfor data and service quality, depth and breadth to remain competitive.

• Questionable long-term viability, because EOL remains unprofitable; the concern forcustomers is mitigated to the degree that alternative sources of comparable XBRL-compliant fundamental data become available. This is because use of an industry data

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standard and access based on the near-ubiquitous Excel spreadsheet make the analyticalmodels and interfaces developed for use with I-Metrix data portable for use with otherXBRL-compliant data sources.

Recommendations

To improve quality and efficiency, investment services companies that analyze fundamental datafor SEC-regulated corporations should immediately evaluate I-Metrix against their specificrequirements. Companies with unmet needs should periodically re-evaluate I-Metrix as depthand breadth of data and tools expand. Adopters must recognize that use of I-Metrix will noteliminate the need to validate data and analytical results, but that substantial efficiencies can beachieved by minimizing manual data access and manipulation, enabling analysts to focus theirexpertise on analytical tasks.

BI vendors should investigate the potential that industry-standard data presents, and developtools and partnerships for working with and enhancing XBRL-compliant data, recognizing thatthe availability of I-Metrix signals increasing XBRL maturity.

RECOMMENDED READING

“Extensible Business Reporting Language Will Facilitate Investment Analysis”

“Assess Which Investment Industry Messaging and Content Standards Are Most Applicable forYour Firm”

“Hype Cycle for Investment Technologies, 2005”

“Hype Cycle for XML Technologies 2005”

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REGIONAL HEADQUARTERS

Corporate Headquarters

56 Top Gallant RoadStamford, CT 06902-7700U.S.A.+1 203 964 0096

European Headquarters

TamesisThe GlantyEghamSurrey, TW20 9AWUNITED KINGDOM+44 1784 431611

Asia/Pacific Headquarters

Gartner Australasia Pty. Ltd.Level 9, 141 Walker StreetNorth SydneyNew South Wales 2060AUSTRALIA+61 2 9459 4600

Japan Headquarters

Gartner Japan Ltd.Aobadai Hills, 6F7-7, Aobadai, 4-chomeMeguro-ku, Tokyo 153-0042JAPAN+81 3 3481 3670

Latin America Headquarters

Gartner do BrazilAv. das Nações Unidas, 125519° andar—World Trade Center04578-903—São Paulo SPBRAZIL+55 11 3443 1509

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A ‘REVOLUTION’ IN CORPORATE REPORTING

By William M. Sinnett

Touted by the SEC chairman as the next revolution in corporate reporting, FERF spoke withthree early-adopter companies to find out why they favor this new format.

Christopher Cox, the newly minted chairman of the U.S. Securities and Exchange Commission(SEC), is on a mission to improve financial reporting. “We really are on the threshold of arevolution in corporate reporting,” he has said. During his tenure, he intends to “bring our sys-tem of corporate disclosure and financial reporting into the 21st century.”

He presented his vision for interactive data in a videotaped speech for the 12th XBRL Interna-tional Conference, held in Tokyo on Nov. 7, 2005: “Interactive data could make it possible forissuers to reduce the cost of substantiating the numbers that appear in their financial statements.It would assist regulators in maintaining the integrity of the markets. Interactive data would alsomake disclosures more useful to investors, and to every market participant,” said Cox.

Will Cox’s vision evolve into reality, or is it merely a “revolution” of a small group of pioneers?

One means to provide the interactive data Cox speaks of is by using XBRL (eXtensible BusinessReporting Language), a language for the electronic communication of business and financialdata. XBRL is not a technology, but a set of standards, called taxonomies, which are built usingthe Extensible Markup Language (XML).

XBRL is being developed by an international non-profit consortium of approximately 350 majorcompanies, organizations and government agencies. It is an open standard that is free of licensefees.

Last February, the SEC had announced an XBRL Voluntary Filing Program (VFP). Its primarypurpose, the SEC said then, is to “assess XBRL technology, including both the ability of regis-trants to tag their financial information using XBRL and the benefits for using tagged data foranalysis.”

But as of Dec. 1, 2005, only nine companies were participating in the VFP (see box on nextpage). Financial Executives Research Foundation (FERF) spoke with financial executives at threeof the nine companies: EDGAR Online Inc., Microsoft Corp. and United Technologies Corp.

EDGAR Online Inc.

EDGAR Online’s Chief Operating Officer and CFO Greg Adams says his company has been anactive and enthusiastic proponent of XBRL since the founding of the XBRL consortium.“Participation in the VFP was simply an extension of our commitment to fostering the adoptionof XBRL and our belief that it will lead to more transparent company reporting,” says Adams.

Back in 1984, when the current Electronic Data Gathering, Analysis and Retrieval System(EDGAR) was adopted by the SEC, a voluntary pilot program was also established. “The

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EDGAR system has been the backbone of the SEC’s disclosure program,” says Adams. The SECbegan accepting some SEC filings in electronic format in January of 1994, and since that time,the number of filing types that can be submitted electronically has grown exponentially, as hasthe daily volume. However, Adams says, “Unfortunately, the underlying technology of theEDGAR system has not kept pace with advances in information technology (IT).”

What XBRL will do, he adds, is enhance the EDGAR system. “XBRL submissions will provideadditional transparency to the financial disclosures of U.S. public companies. The stand-ardization of the financial statements in XBRL taxonomies will also facilitate analysis by allusers of the EDGAR system, thereby increasing reliance on EDGAR,” says Adams.

EDGAR Online provides financial information (including EDGAR filings and XBRL financialstatements) and a variety of analysis tools via online subscriptions and licensing agreements toprofessionals in financial institutions, corporations and accounting firms.

EDGAR Online’s initial VFP effort of about 160 hours included tagging more than 200 items.However, Adams says, “Because EDGAR Online has built a conversion tool and has extensiveexperience in industry taxonomies, the conversion of our own financial statements took rela-tively little time and effort.”

Besides its own, Adams comments that EDGAR Online has already converted to XBRL financialstatements of all the companies in its database to include current financial statements as well asthe last seven years and 28 quarters. These financials are available through I-Metrix, a recently-introduced subscription service.

“We have taken a leadership position by converting the financial statements of all U.S. publiccompanies to XBRL, and we are now working closely with the consortium on the developmentof industry-specific taxonomies,” says Adams.

Microsoft Corp.

Microsoft was the first company to furnish full financials and footnotes tagged in XBRL. ScottDi Valerio, corporate vice president, finance and administration and chief accounting officer(CAO), says of Microsoft’s initial effort: “The first time we converted our Form 10-Q, the effortrequired about 175 hours—75 hours for XBRL taxonomy extension and customization, 60hours to create and validate the XBRL document and 40 hours for quality assurance review.” Henotes the process was the joint effort of three individuals: an accountant; an XBRL technologistto extend the taxonomy and assist with technical validation; and an external reporting teammember to provide quality assurance.

However, Di Valerio adds, “The second time we tagged our 10-Q, we reduced the time bytwo-thirds, to 60 hours.”

In September 2005, Microsoft became the first company to submit its annual Form 10-K report(for the year ending June 30, 2005) to the SEC in XBRL format. “Because of the number of dis-closures and the length of the annual report, tagging our Form 10-K required additional time,”

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explains Di Valerio. He says that Microsoft learned a number of important lessons during itsefforts to render XBRL documents. Those include:

• Tagging data is a new task, and companies will need guidance on best practices. Forexample, companies will need to learn how to optimize “context,” an XBRL concept thatrepresents time periods, business segments and reporting scenarios. Context representsone-third of the XML in the 10-Q.

• Financial statement preparers need software tools for rendering XBRL documents. Thereare tools available, but these tools are early in their product cycle, and still needenhancements to enable ease of use for tagging and extending standard taxonomies.

• XBRL taxonomy extensions and validation processes present a new and complex technol-ogy to preparers.

So, how does Di Valerio regard the XBRL efforts, and have they been worthwhile? He says thatwhen he meets with the finance leadership of customers and other companies, he is “struck bythe similarity of the business challenges we face. We are all trying to improve our financialreporting processes, from closing the books to getting information back to management in atimely manner, so that we can make better decisions.” He regards XBRL as another way thattechnology can enable automation and efficiency, and strengthen internal controls. “We are anactive supporter of XBRL because we recognize its potential to help solve common businessissues. We do envision the use of XBRL for internal reporting, and we are evaluating scenarios inwhich XBRL could help automate our processes.”

United Technologies Corp.

United Technologies decided to participate in the SEC’s Voluntary Filing Program, believing thatit is only a matter of time before XBRL will be required. “Participation in the voluntary programwas a great way to get introduced to the technology and begin to learn and understand the tools,the mechanics of tagging and special filing considerations,” says John Stantial, director of finan-cial reporting for United Technologies.

Stantial concedes that there is an initial learning curve for some of the unique terminology andrequirements of XBRL, but says, “for the most part, the tagging is a fairly expeditious processafter you become familiarized with the mechanics.” He comments that the level of work alsodepends on whether the intent is to tag the basic financial data or also tag footnotes andManagement’s Discussion and Analysis (MD&A). In addition, another level of modification tothe standard taxonomies may be required, based on the specifics of a company’s financial state-ments.

For United Technologies, Stantial and one of his managers were able to render the XBRL docu-ments themselves, with minimal outside help. The three filings to date, and the Form 10-Q he iscurrently working on, have taken approximately 400 hours.

“The initial filing took a disproportionate amount of time as we familiarized ourselves with thetagging software, the tagging process and filing issues,” he says, adding that “subsequent filings

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have gone much more expeditiously. Periodic questions will arise on extensions, taxonomies, orsome other aspect, for which we may consult outside expertise.”

Stantial advises other financial executives who are considering VFP to use this current voluntaryperiod advantageously to become acclimated to the tagging software tools available and themechanics of the tagging and filing processes. He says he believes that “XBRL will become thestandard before too long, given all that it has to offer, so the earlier companies can get up tospeed and work out their issues, the better off they will be.”

So, What’s the Problem?

If XBRL is the latest and greatest, why aren’t more companies voluntary filers, and if they’re notnow, when will they join this group? “In the early stages of any new technology, there are earlyadopters, who tend to be technologically savvy,” explains Microsoft’s Di Valerio. “Others aresatisfied to use existing technology until the new technology is more widely accepted and bettertools are developed.” But, he argues, “It is up to the early adopters, such as Microsoft, to pro-vide leadership and pave the way for the others.”

Also, SEC Chairman Cox seems optimistic and not concerned with the slow pace of adoption.“The reason that everyone is not doing their financial reporting using interactive data is simple:it’s a new concept. People will use it when they discover how much time and money it can savethem, by automating and speeding up the process.” Indeed, he says the SEC wants it because itwill make financial reports much more useful.

“Companies will want interactive data for the same reason. The truth is, it’s inevitable—and ifthe 21st century has shown us anything thus far, it’s that technological change occurs extremelyquickly.”

Cox continues: “It’s not surprising that we’re hearing from both filing agents and accountingfirms that their clients are suddenly showing greater interest in interactive data. Given its enor-mous potential, there’s no doubt this increased interest in interactive data will soon translate intowidespread adoption.”

William M. Sinnett (bsinnett@fei.org) is Director ofResearch at Financial Executives Research Foundation (FERF).

Filers in the SEC Voluntary Filing Program, as of Dec. 1, 2005Adobe Systems Inc.Bowne & Co. Inc.Business Objects S.A.RR Donnelley & Sons Co.EDGAR Online Inc.EMC Corp.InfoSys Technologies LTDMicrosoft Corp.United Technologies Corp.

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NOTES

NOTES

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